Correlation Between Medplus Health and Indian Railway

Can any of the company-specific risk be diversified away by investing in both Medplus Health and Indian Railway 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 Medplus Health and Indian Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Medplus Health Services and Indian Railway Finance, you can compare the effects of market volatilities on Medplus Health and Indian Railway 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 Medplus Health with a short position of Indian Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medplus Health and Indian Railway.

Diversification Opportunities for Medplus Health and Indian Railway

0.05

Correlation Coefficient

Medplus Health  Indian Railway

Significant diversification

The 3 months correlation between Medplus and Indian is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Medplus Health Services and Indian Railway Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Railway Finance and Medplus Health 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 Medplus Health Services are associated (or correlated) with Indian Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Railway Finance has no effect on the direction of Medplus Health i.e., Medplus Health and Indian Railway go up and down completely randomly.

Pair Corralation between Medplus Health and Indian Railway

Assuming the 90 days trading horizon Medplus Health Services is expected to generate 0.69 times more return on investment than Indian Railway. However, Medplus Health Services is 1.46 times less risky than Indian Railway. It trades about 0.13 of its potential returns per unit of risk. Indian Railway Finance is currently generating about -0.1 per unit of risk. If you would invest  71,570  in Medplus Health Services on September 4, 2024 and sell it today you would earn a total of  9,875  from holding Medplus Health Services or generate 13.8% return on investment over 90 days.

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

Medplus Health Services  vs.  Indian Railway Finance

Medplus Health Services

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Medplus Health Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Medplus Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Indian Railway Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Railway Finance 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Medplus Health and Indian Railway

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

The idea behind Medplus Health Services and Indian Railway Finance 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.