Correlation Between Natco Pharma and Atrys Health

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

By analyzing existing cross correlation between Natco Pharma Limited and Atrys Health SL, you can compare the effects of market volatilities on Natco Pharma and Atrys Health 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 Natco Pharma with a short position of Atrys Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natco Pharma and Atrys Health.

Diversification Opportunities for Natco Pharma and Atrys Health

-0.54

Correlation Coefficient

Natco Pharma  Atrys Health

Excellent diversification

The 3 months correlation between Natco and Atrys is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Natco Pharma Limited and Atrys Health SL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrys Health SL and Natco Pharma 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 Natco Pharma Limited are associated (or correlated) with Atrys Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrys Health SL has no effect on the direction of Natco Pharma i.e., Natco Pharma and Atrys Health go up and down completely randomly.

Pair Corralation between Natco Pharma and Atrys Health

Assuming the 90 days trading horizon Natco Pharma Limited is expected to generate 1.3 times more return on investment than Atrys Health. However, Natco Pharma is 1.3 times more volatile than Atrys Health SL. It trades about 0.13 of its potential returns per unit of risk. Atrys Health SL is currently generating about -0.21 per unit of risk. If you would invest  99,730  in Natco Pharma Limited on February 5, 2024 and sell it today you would earn a total of  3,680  from holding Natco Pharma Limited or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Natco Pharma Limited  vs.  Atrys Health SL

Natco Pharma Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natco Pharma Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Natco Pharma demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Atrys Health SL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrys Health SL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Natco Pharma and Atrys Health

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

The idea behind Natco Pharma Limited and Atrys Health SL 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..