Correlation Between National Health and INDIKA ENERGY
Can any of the company-specific risk be diversified away by investing in both National Health and INDIKA ENERGY 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 National Health and INDIKA ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Health Investors and INDIKA ENERGY, you can compare the effects of market volatilities on National Health and INDIKA ENERGY 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 National Health with a short position of INDIKA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Health and INDIKA ENERGY.
Diversification Opportunities for National Health and INDIKA ENERGY
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and INDIKA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding National Health Investors and INDIKA ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDIKA ENERGY and National 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 National Health Investors are associated (or correlated) with INDIKA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDIKA ENERGY has no effect on the direction of National Health i.e., National Health and INDIKA ENERGY go up and down completely randomly.
Pair Corralation between National Health and INDIKA ENERGY
Assuming the 90 days trading horizon National Health Investors is expected to generate 0.47 times more return on investment than INDIKA ENERGY. However, National Health Investors is 2.13 times less risky than INDIKA ENERGY. It trades about 0.06 of its potential returns per unit of risk. INDIKA ENERGY is currently generating about -0.02 per unit of risk. If you would invest 4,667 in National Health Investors on September 3, 2024 and sell it today you would earn a total of 2,583 from holding National Health Investors or generate 55.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Health Investors vs. INDIKA ENERGY
Performance |
| Timeline |
| National Health Investors |
| INDIKA ENERGY |
National Health and INDIKA ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Health and INDIKA ENERGY
The main advantage of trading using opposite National Health and INDIKA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Health position performs unexpectedly, INDIKA ENERGY 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 INDIKA ENERGY will offset losses from the drop in INDIKA ENERGY's long position.| National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc | National Health vs. Apple Inc |
| INDIKA ENERGY vs. SMA Solar Technology | INDIKA ENERGY vs. Siamgas And Petrochemicals | INDIKA ENERGY vs. Check Point Software | INDIKA ENERGY vs. EPSILON HEALTHCARE LTD |
Check out your portfolio center.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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