Correlation Between Bajaj Healthcare and Global Education

Can any of the company-specific risk be diversified away by investing in both Bajaj Healthcare and Global Education 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 Bajaj Healthcare and Global Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bajaj Healthcare Limited and Global Education Limited, you can compare the effects of market volatilities on Bajaj Healthcare and Global Education 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 Bajaj Healthcare with a short position of Global Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bajaj Healthcare and Global Education.

Diversification Opportunities for Bajaj Healthcare and Global Education

0.31

Correlation Coefficient

Bajaj Healthcare  Global Education

Weak diversification

The 3 months correlation between Bajaj and Global is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bajaj Healthcare Limited and Global Education Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Education and Bajaj Healthcare 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 Bajaj Healthcare Limited are associated (or correlated) with Global Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Education has no effect on the direction of Bajaj Healthcare i.e., Bajaj Healthcare and Global Education go up and down completely randomly.

Pair Corralation between Bajaj Healthcare and Global Education

Assuming the 90 days trading horizon Bajaj Healthcare Limited is expected to under-perform the Global Education. But the stock apears to be less risky and, when comparing its historical volatility, Bajaj Healthcare Limited is 1.21 times less risky than Global Education. The stock trades about 0.0 of its potential returns per unit of risk. The Global Education Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  20,277  in Global Education Limited on September 5, 2024 and sell it today you would lose (404.00) from holding Global Education Limited or give up 1.99% of portfolio value over 90 days.

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

Bajaj Healthcare Limited  vs.  Global Education Limited

Bajaj Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bajaj Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bajaj Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Global Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Education Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Global Education is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bajaj Healthcare and Global Education

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

The idea behind Bajaj Healthcare Limited and Global Education 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.