Correlation Between Indraprastha Medical and Generic Engineering

Can any of the company-specific risk be diversified away by investing in both Indraprastha Medical and Generic Engineering 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 Indraprastha Medical and Generic Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indraprastha Medical and Generic Engineering Construction, you can compare the effects of market volatilities on Indraprastha Medical and Generic Engineering 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 Indraprastha Medical with a short position of Generic Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indraprastha Medical and Generic Engineering.

Diversification Opportunities for Indraprastha Medical and Generic Engineering

0.71

Correlation Coefficient

Indraprastha Medical  Generic Engineering

Poor diversification

The 3 months correlation between Indraprastha and Generic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Indraprastha Medical and Generic Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generic Engineering and Indraprastha Medical 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 Indraprastha Medical are associated (or correlated) with Generic Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generic Engineering has no effect on the direction of Indraprastha Medical i.e., Indraprastha Medical and Generic Engineering go up and down completely randomly.

Pair Corralation between Indraprastha Medical and Generic Engineering

Assuming the 90 days trading horizon Indraprastha Medical is expected to generate 1.02 times more return on investment than Generic Engineering. However, Indraprastha Medical is 1.02 times more volatile than Generic Engineering Construction. It trades about 0.07 of its potential returns per unit of risk. Generic Engineering Construction is currently generating about 0.05 per unit of risk. If you would invest  45,615  in Indraprastha Medical on September 19, 2024 and sell it today you would earn a total of  4,690  from holding Indraprastha Medical or generate 10.28% return on investment over 90 days.

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

Indraprastha Medical  vs.  Generic Engineering Constructi

Indraprastha Medical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Indraprastha Medical are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Indraprastha Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Generic Engineering

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Generic Engineering Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Generic Engineering may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Indraprastha Medical and Generic Engineering

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

The idea behind Indraprastha Medical and Generic Engineering Construction 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.