Correlation Between Agarwal Industrial and Fortis Healthcare

Can any of the company-specific risk be diversified away by investing in both Agarwal Industrial and Fortis Healthcare at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Agarwal Industrial and Fortis Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agarwal Industrial and Fortis Healthcare Limited, you can compare the effects of market volatilities on Agarwal Industrial and Fortis Healthcare and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Agarwal Industrial with a short position of Fortis Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agarwal Industrial and Fortis Healthcare.

Diversification Opportunities for Agarwal Industrial and Fortis Healthcare

0.42

Correlation Coefficient

Agarwal Industrial  Fortis Healthcare

Very weak diversification

The 3 months correlation between Agarwal and Fortis is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Agarwal Industrial and Fortis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Healthcare and Agarwal Industrial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Agarwal Industrial are associated (or correlated) with Fortis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Healthcare has no effect on the direction of Agarwal Industrial i.e., Agarwal Industrial and Fortis Healthcare go up and down completely randomly.

Pair Corralation between Agarwal Industrial and Fortis Healthcare

Assuming the 90 days trading horizon Agarwal Industrial is expected to generate 1.05 times less return on investment than Fortis Healthcare. In addition to that, Agarwal Industrial is 1.27 times more volatile than Fortis Healthcare Limited. It trades about 0.09 of its total potential returns per unit of risk. Fortis Healthcare Limited is currently generating about 0.13 per unit of volatility. If you would invest  59,295  in Fortis Healthcare Limited on September 18, 2024 and sell it today you would earn a total of  9,400  from holding Fortis Healthcare Limited or generate 15.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Agarwal Industrial  vs.  Fortis Healthcare Limited

Agarwal Industrial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agarwal Industrial are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Agarwal Industrial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fortis Healthcare

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortis Healthcare Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Fortis Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Agarwal Industrial and Fortis Healthcare

The main advantage of trading using opposite Agarwal Industrial and Fortis Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agarwal Industrial position performs unexpectedly, Fortis Healthcare can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fortis Healthcare will offset losses from the drop in Fortis Healthcare's long position.

The idea behind Agarwal Industrial and Fortis Healthcare Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.