Correlation Between City Union and Elin Electronics
Can any of the company-specific risk be diversified away by investing in both City Union and Elin Electronics 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 City Union and Elin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Union Bank and Elin Electronics Limited, you can compare the effects of market volatilities on City Union and Elin Electronics 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 City Union with a short position of Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Union and Elin Electronics.
Diversification Opportunities for City Union and Elin Electronics
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Elin is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding City Union Bank and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics and City Union 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 City Union Bank are associated (or correlated) with Elin Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elin Electronics has no effect on the direction of City Union i.e., City Union and Elin Electronics go up and down completely randomly.
Pair Corralation between City Union and Elin Electronics
Assuming the 90 days trading horizon City Union Bank is expected to generate 0.8 times more return on investment than Elin Electronics. However, City Union Bank is 1.25 times less risky than Elin Electronics. It trades about 0.07 of its potential returns per unit of risk. Elin Electronics Limited is currently generating about -0.15 per unit of risk. If you would invest 15,394 in City Union Bank on October 14, 2024 and sell it today you would earn a total of 1,134 from holding City Union Bank or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Union Bank vs. Elin Electronics Limited
Performance |
| Timeline |
| City Union Bank |
| Elin Electronics |
City Union and Elin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Union and Elin Electronics
The main advantage of trading using opposite City Union and Elin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Union position performs unexpectedly, Elin Electronics 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 Elin Electronics will offset losses from the drop in Elin Electronics' long position.| City Union vs. WESTLIFE FOODWORLD LIMITED | City Union vs. Apex Frozen Foods | City Union vs. Jubilant Foodworks Limited | City Union vs. Ankit Metal Power |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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