Correlation Between Vibhavadi Medical and Rajthanee Hospital

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

By analyzing existing cross correlation between Vibhavadi Medical Center and Rajthanee Hospital Public, you can compare the effects of market volatilities on Vibhavadi Medical and Rajthanee 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 Vibhavadi Medical with a short position of Rajthanee Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vibhavadi Medical and Rajthanee Hospital.

Diversification Opportunities for Vibhavadi Medical and Rajthanee Hospital

-0.41

Correlation Coefficient

Vibhavadi Medical  Rajthanee Hospital

Very good diversification

The 3 months correlation between Vibhavadi and Rajthanee is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vibhavadi Medical Center and Rajthanee Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rajthanee Hospital Public and Vibhavadi 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 Vibhavadi Medical Center are associated (or correlated) with Rajthanee Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rajthanee Hospital Public has no effect on the direction of Vibhavadi Medical i.e., Vibhavadi Medical and Rajthanee Hospital go up and down completely randomly.

Pair Corralation between Vibhavadi Medical and Rajthanee Hospital

Assuming the 90 days trading horizon Vibhavadi Medical Center is expected to under-perform the Rajthanee Hospital. But the stock apears to be less risky and, when comparing its historical volatility, Vibhavadi Medical Center is 1.16 times less risky than Rajthanee Hospital. The stock trades about -0.05 of its potential returns per unit of risk. The Rajthanee Hospital Public is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,274  in Rajthanee Hospital Public on September 14, 2024 and sell it today you would lose (144.00) from holding Rajthanee Hospital Public or give up 6.33% of portfolio value over 90 days.

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

Vibhavadi Medical Center  vs.  Rajthanee Hospital Public

Vibhavadi Medical Center

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rajthanee Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rajthanee Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Rajthanee Hospital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Vibhavadi Medical and Rajthanee Hospital

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

The idea behind Vibhavadi Medical Center and Rajthanee Hospital Public 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.