Correlation Between Electrosteel Castings and Barbeque Nation

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Can any of the company-specific risk be diversified away by investing in both Electrosteel Castings and Barbeque Nation 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 Electrosteel Castings and Barbeque Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electrosteel Castings Limited and Barbeque Nation Hospitality, you can compare the effects of market volatilities on Electrosteel Castings and Barbeque Nation 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 Electrosteel Castings with a short position of Barbeque Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrosteel Castings and Barbeque Nation.

Diversification Opportunities for Electrosteel Castings and Barbeque Nation

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Electrosteel and Barbeque is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Electrosteel Castings Limited and Barbeque Nation Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barbeque Nation Hosp and Electrosteel Castings 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 Electrosteel Castings Limited are associated (or correlated) with Barbeque Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barbeque Nation Hosp has no effect on the direction of Electrosteel Castings i.e., Electrosteel Castings and Barbeque Nation go up and down completely randomly.

Pair Corralation between Electrosteel Castings and Barbeque Nation

Assuming the 90 days trading horizon Electrosteel Castings Limited is expected to under-perform the Barbeque Nation. In addition to that, Electrosteel Castings is 1.52 times more volatile than Barbeque Nation Hospitality. It trades about -0.09 of its total potential returns per unit of risk. Barbeque Nation Hospitality is currently generating about -0.1 per unit of volatility. If you would invest  52,745  in Barbeque Nation Hospitality on October 18, 2024 and sell it today you would lose (12,825) from holding Barbeque Nation Hospitality or give up 24.32% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Electrosteel Castings Limited  vs.  Barbeque Nation Hospitality

 Performance 
       Timeline  
Electrosteel Castings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Electrosteel Castings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Barbeque Nation Hosp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Barbeque Nation Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Electrosteel Castings and Barbeque Nation Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Electrosteel Castings and Barbeque Nation

The main advantage of trading using opposite Electrosteel Castings and Barbeque Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electrosteel Castings position performs unexpectedly, Barbeque Nation 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 Barbeque Nation will offset losses from the drop in Barbeque Nation's long position.
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The idea behind Electrosteel Castings Limited and Barbeque Nation Hospitality 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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