Correlation Between Agro Tech and Electronics Mart
Can any of the company-specific risk be diversified away by investing in both Agro Tech and Electronics Mart 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 Agro Tech and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agro Tech Foods and Electronics Mart India, you can compare the effects of market volatilities on Agro Tech and Electronics Mart 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 Agro Tech with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agro Tech and Electronics Mart.
Diversification Opportunities for Agro Tech and Electronics Mart
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Agro and Electronics is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Agro Tech Foods and Electronics Mart India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Mart India and Agro Tech 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 Agro Tech Foods are associated (or correlated) with Electronics Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Mart India has no effect on the direction of Agro Tech i.e., Agro Tech and Electronics Mart go up and down completely randomly.
Pair Corralation between Agro Tech and Electronics Mart
Assuming the 90 days trading horizon Agro Tech Foods is expected to generate 1.08 times more return on investment than Electronics Mart. However, Agro Tech is 1.08 times more volatile than Electronics Mart India. It trades about 0.04 of its potential returns per unit of risk. Electronics Mart India is currently generating about -0.12 per unit of risk. If you would invest 85,870 in Agro Tech Foods on August 29, 2024 and sell it today you would earn a total of 2,945 from holding Agro Tech Foods or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agro Tech Foods vs. Electronics Mart India
Performance |
| Timeline |
| Agro Tech Foods |
| Electronics Mart India |
Agro Tech and Electronics Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agro Tech and Electronics Mart
The main advantage of trading using opposite Agro Tech and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agro Tech position performs unexpectedly, Electronics Mart 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 Electronics Mart will offset losses from the drop in Electronics Mart's long position.| Agro Tech vs. Melstar Information Technologies | Agro Tech vs. Consolidated Construction Consortium | Agro Tech vs. Biofil Chemicals Pharmaceuticals | Agro Tech vs. India Glycols Limited |
| Electronics Mart vs. Hemisphere Properties India | Electronics Mart vs. India Glycols Limited | Electronics Mart vs. Indo Borax Chemicals | Electronics Mart vs. Kingfa Science Technology |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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