Correlation Between Aster DM and Apollo Sindoori

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

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

Diversification Opportunities for Aster DM and Apollo Sindoori

0.16

Correlation Coefficient

Aster DM  Apollo Sindoori

Average diversification

The 3 months correlation between Aster and Apollo is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aster DM Healthcare and Apollo Sindoori Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apollo Sindoori Hotels and Aster DM 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 Aster DM Healthcare are associated (or correlated) with Apollo Sindoori. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apollo Sindoori Hotels has no effect on the direction of Aster DM i.e., Aster DM and Apollo Sindoori go up and down completely randomly.

Pair Corralation between Aster DM and Apollo Sindoori

Assuming the 90 days trading horizon Aster DM Healthcare is expected to generate 0.66 times more return on investment than Apollo Sindoori. However, Aster DM Healthcare is 1.5 times less risky than Apollo Sindoori. It trades about 0.14 of its potential returns per unit of risk. Apollo Sindoori Hotels is currently generating about 0.04 per unit of risk. If you would invest  40,600  in Aster DM Healthcare on September 5, 2024 and sell it today you would earn a total of  7,710  from holding Aster DM Healthcare or generate 18.99% return on investment over 90 days.

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

Aster DM Healthcare  vs.  Apollo Sindoori Hotels

Aster DM Healthcare

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Apollo Sindoori Hotels

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apollo Sindoori Hotels are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical indicators, Apollo Sindoori may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aster DM and Apollo Sindoori

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

The idea behind Aster DM Healthcare and Apollo Sindoori Hotels 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.