Correlation Between Emcure Pharmaceuticals and Akums Drugs

Can any of the company-specific risk be diversified away by investing in both Emcure Pharmaceuticals and Akums Drugs 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 Emcure Pharmaceuticals and Akums Drugs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emcure Pharmaceuticals and Akums Drugs and, you can compare the effects of market volatilities on Emcure Pharmaceuticals and Akums Drugs 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 Emcure Pharmaceuticals with a short position of Akums Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emcure Pharmaceuticals and Akums Drugs.

Diversification Opportunities for Emcure Pharmaceuticals and Akums Drugs

0.69

Correlation Coefficient

Emcure Pharmaceuticals  Akums Drugs

Poor diversification

The 3 months correlation between Emcure and Akums is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Emcure Pharmaceuticals and Akums Drugs and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akums Drugs and Emcure Pharmaceuticals 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 Emcure Pharmaceuticals are associated (or correlated) with Akums Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akums Drugs has no effect on the direction of Emcure Pharmaceuticals i.e., Emcure Pharmaceuticals and Akums Drugs go up and down completely randomly.

Pair Corralation between Emcure Pharmaceuticals and Akums Drugs

Assuming the 90 days trading horizon Emcure Pharmaceuticals is expected to generate 0.72 times more return on investment than Akums Drugs. However, Emcure Pharmaceuticals is 1.39 times less risky than Akums Drugs. It trades about -0.02 of its potential returns per unit of risk. Akums Drugs and is currently generating about -0.18 per unit of risk. If you would invest  144,445  in Emcure Pharmaceuticals on September 23, 2024 and sell it today you would lose (5,775) from holding Emcure Pharmaceuticals or give up 4.0% of portfolio value over 90 days.

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

Emcure Pharmaceuticals  vs.  Akums Drugs and

Emcure Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emcure Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Emcure Pharmaceuticals is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Akums Drugs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akums Drugs and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Emcure Pharmaceuticals and Akums Drugs

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

The idea behind Emcure Pharmaceuticals and Akums Drugs and 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.