Correlation Between Apollo Sindoori and Indian Railway

Can any of the company-specific risk be diversified away by investing in both Apollo Sindoori and Indian Railway 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 Apollo Sindoori and Indian Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apollo Sindoori Hotels and Indian Railway Finance, you can compare the effects of market volatilities on Apollo Sindoori and Indian Railway 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 Apollo Sindoori with a short position of Indian Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Sindoori and Indian Railway.

Diversification Opportunities for Apollo Sindoori and Indian Railway

-0.32

Correlation Coefficient

Apollo Sindoori  Indian Railway

Very good diversification

The 3 months correlation between Apollo and Indian is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Sindoori Hotels and Indian Railway Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Railway Finance and Apollo Sindoori 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 Apollo Sindoori Hotels are associated (or correlated) with Indian Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Railway Finance has no effect on the direction of Apollo Sindoori i.e., Apollo Sindoori and Indian Railway go up and down completely randomly.

Pair Corralation between Apollo Sindoori and Indian Railway

Assuming the 90 days trading horizon Apollo Sindoori Hotels is expected to generate 1.47 times more return on investment than Indian Railway. However, Apollo Sindoori is 1.47 times more volatile than Indian Railway Finance. It trades about 0.06 of its potential returns per unit of risk. Indian Railway Finance is currently generating about -0.08 per unit of risk. If you would invest  167,646  in Apollo Sindoori Hotels on August 31, 2024 and sell it today you would earn a total of  18,114  from holding Apollo Sindoori Hotels or generate 10.8% return on investment over 90 days.

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

Apollo Sindoori Hotels  vs.  Indian Railway Finance

Apollo Sindoori Hotels

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Sindoori Hotels are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Apollo Sindoori displayed solid returns over the last few months and may actually be approaching a breakup point.

Indian Railway Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Railway Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Apollo Sindoori and Indian Railway

The main advantage of trading using opposite Apollo Sindoori and Indian Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Sindoori position performs unexpectedly, Indian Railway 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 Indian Railway will offset losses from the drop in Indian Railway's long position.

The idea behind Apollo Sindoori Hotels and Indian Railway Finance 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.