Correlation Between Elin Electronics and Den Networks
Can any of the company-specific risk be diversified away by investing in both Elin Electronics and Den Networks 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 Elin Electronics and Den Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elin Electronics Limited and Den Networks Limited, you can compare the effects of market volatilities on Elin Electronics and Den Networks 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 Elin Electronics with a short position of Den Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elin Electronics and Den Networks.
Diversification Opportunities for Elin Electronics and Den Networks
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elin and Den is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Elin Electronics Limited and Den Networks Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Den Networks Limited and Elin Electronics 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 Elin Electronics Limited are associated (or correlated) with Den Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Den Networks Limited has no effect on the direction of Elin Electronics i.e., Elin Electronics and Den Networks go up and down completely randomly.
Pair Corralation between Elin Electronics and Den Networks
Assuming the 90 days trading horizon Elin Electronics is expected to generate 1.63 times less return on investment than Den Networks. In addition to that, Elin Electronics is 1.09 times more volatile than Den Networks Limited. It trades about 0.02 of its total potential returns per unit of risk. Den Networks Limited is currently generating about 0.03 per unit of volatility. If you would invest 3,860 in Den Networks Limited on September 5, 2024 and sell it today you would earn a total of 749.00 from holding Den Networks Limited or generate 19.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.76% |
| Values | Daily Returns |
Elin Electronics Limited vs. Den Networks Limited
Performance |
| Timeline |
| Elin Electronics |
| Den Networks Limited |
Elin Electronics and Den Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elin Electronics and Den Networks
The main advantage of trading using opposite Elin Electronics and Den Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elin Electronics position performs unexpectedly, Den Networks 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 Den Networks will offset losses from the drop in Den Networks' long position.| Elin Electronics vs. Indian Railway Finance | Elin Electronics vs. Cholamandalam Financial Holdings | Elin Electronics vs. Reliance Industries Limited | Elin Electronics vs. Tata Consultancy Services |
| Den Networks vs. Elin Electronics Limited | Den Networks vs. Indian Metals Ferro | Den Networks vs. Orient Technologies Limited | Den Networks vs. Agro Tech Foods |
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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