Correlation Between Kilitch Drugs and Yatharth Hospital

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

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

Diversification Opportunities for Kilitch Drugs and Yatharth Hospital

-0.57

Correlation Coefficient

Kilitch Drugs  Yatharth Hospital

Excellent diversification

The 3 months correlation between Kilitch and Yatharth is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kilitch Drugs Limited and Yatharth Hospital Trauma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yatharth Hospital Trauma and Kilitch Drugs 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 Kilitch Drugs Limited are associated (or correlated) with Yatharth Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yatharth Hospital Trauma has no effect on the direction of Kilitch Drugs i.e., Kilitch Drugs and Yatharth Hospital go up and down completely randomly.

Pair Corralation between Kilitch Drugs and Yatharth Hospital

Assuming the 90 days trading horizon Kilitch Drugs is expected to generate 270.09 times less return on investment than Yatharth Hospital. But when comparing it to its historical volatility, Kilitch Drugs Limited is 1.0 times less risky than Yatharth Hospital. It trades about 0.0 of its potential returns per unit of risk. Yatharth Hospital Trauma is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  51,805  in Yatharth Hospital Trauma on September 4, 2024 and sell it today you would earn a total of  9,200  from holding Yatharth Hospital Trauma or generate 17.76% return on investment over 90 days.

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

Kilitch Drugs Limited  vs.  Yatharth Hospital Trauma

Kilitch Drugs Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kilitch Drugs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kilitch Drugs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Yatharth Hospital Trauma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yatharth Hospital Trauma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Yatharth Hospital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kilitch Drugs and Yatharth Hospital

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

The idea behind Kilitch Drugs Limited and Yatharth Hospital Trauma 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.