Correlation Between Aarti Drugs and PI Industries

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

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

Diversification Opportunities for Aarti Drugs and PI Industries

0.6

Correlation Coefficient

Aarti Drugs  PI Industries

Poor diversification

The 3 months correlation between Aarti and PIIND is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aarti Drugs Limited and PI Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Industries Limited and Aarti 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 Aarti Drugs Limited are associated (or correlated) with PI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Industries Limited has no effect on the direction of Aarti Drugs i.e., Aarti Drugs and PI Industries go up and down completely randomly.

Pair Corralation between Aarti Drugs and PI Industries

Assuming the 90 days trading horizon Aarti Drugs Limited is expected to generate 2.46 times more return on investment than PI Industries. However, Aarti Drugs is 2.46 times more volatile than PI Industries Limited. It trades about 0.19 of its potential returns per unit of risk. PI Industries Limited is currently generating about 0.13 per unit of risk. If you would invest  36,585  in Aarti Drugs Limited on April 24, 2025 and sell it today you would earn a total of  17,090  from holding Aarti Drugs Limited or generate 46.71% return on investment over 90 days.

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

Aarti Drugs Limited  vs.  PI Industries Limited

Aarti Drugs Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aarti Drugs Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Aarti Drugs reported solid returns over the last few months and may actually be approaching a breakup point.

PI Industries Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PI Industries Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, PI Industries may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Aarti Drugs and PI Industries

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

The idea behind Aarti Drugs Limited and PI Industries Limited 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.