Correlation Between Den Networks and Elin Electronics
Can any of the company-specific risk be diversified away by investing in both Den Networks 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 Den Networks and Elin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Den Networks Limited and Elin Electronics Limited, you can compare the effects of market volatilities on Den Networks 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 Den Networks with a short position of Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Den Networks and Elin Electronics.
Diversification Opportunities for Den Networks and Elin Electronics
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Den and Elin is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Den Networks Limited and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics and Den Networks 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 Den Networks Limited 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 Den Networks i.e., Den Networks and Elin Electronics go up and down completely randomly.
Pair Corralation between Den Networks and Elin Electronics
Assuming the 90 days trading horizon Den Networks Limited is expected to generate 0.91 times more return on investment than Elin Electronics. However, Den Networks Limited is 1.1 times less risky than Elin Electronics. It trades about 0.04 of its potential returns per unit of risk. Elin Electronics Limited is currently generating about 0.01 per unit of risk. If you would invest 3,240 in Den Networks Limited on September 13, 2024 and sell it today you would earn a total of 1,288 from holding Den Networks Limited or generate 39.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.98% |
| Values | Daily Returns |
Den Networks Limited vs. Elin Electronics Limited
Performance |
| Timeline |
| Den Networks Limited |
| Elin Electronics |
Den Networks and Elin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Den Networks and Elin Electronics
The main advantage of trading using opposite Den Networks and Elin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Den Networks 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.| Den Networks vs. Bigbloc Construction Limited | Den Networks vs. LT Foods Limited | Den Networks vs. Apex Frozen Foods | Den Networks vs. Action Construction Equipment |
| Elin Electronics vs. Reliance Industries Limited | Elin Electronics vs. Oil Natural Gas | Elin Electronics vs. ICICI Bank Limited | Elin Electronics vs. Bharti Airtel Limited |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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