Correlation Between Bharat Bijlee and Electronics Mart
Can any of the company-specific risk be diversified away by investing in both Bharat Bijlee 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 Bharat Bijlee and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bharat Bijlee Limited and Electronics Mart India, you can compare the effects of market volatilities on Bharat Bijlee 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 Bharat Bijlee with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bharat Bijlee and Electronics Mart.
Diversification Opportunities for Bharat Bijlee and Electronics Mart
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bharat and Electronics is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bharat Bijlee Limited 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 Bharat Bijlee 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 Bharat Bijlee Limited 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 Bharat Bijlee i.e., Bharat Bijlee and Electronics Mart go up and down completely randomly.
Pair Corralation between Bharat Bijlee and Electronics Mart
Assuming the 90 days trading horizon Bharat Bijlee Limited is expected to generate 2.13 times more return on investment than Electronics Mart. However, Bharat Bijlee is 2.13 times more volatile than Electronics Mart India. It trades about -0.03 of its potential returns per unit of risk. Electronics Mart India is currently generating about -0.18 per unit of risk. If you would invest 297,925 in Bharat Bijlee Limited on November 28, 2024 and sell it today you would lose (21,570) from holding Bharat Bijlee Limited or give up 7.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bharat Bijlee Limited vs. Electronics Mart India
Performance |
| Timeline |
| Bharat Bijlee Limited |
| Electronics Mart India |
Bharat Bijlee and Electronics Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bharat Bijlee and Electronics Mart
The main advantage of trading using opposite Bharat Bijlee and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bharat Bijlee 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.| Bharat Bijlee vs. Som Distilleries Breweries | Bharat Bijlee vs. JB Chemicals Pharmaceuticals | Bharat Bijlee vs. Shree Pushkar Chemicals | Bharat Bijlee vs. Chemcon Speciality Chemicals |
| Electronics Mart vs. Home First Finance | Electronics Mart vs. Beta Drugs | Electronics Mart vs. Embassy Office Parks | Electronics Mart vs. Indraprastha Medical |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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