Correlation Between Electronics Mart and Elin Electronics
Can any of the company-specific risk be diversified away by investing in both Electronics Mart 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 Electronics Mart and Elin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electronics Mart India and Elin Electronics Limited, you can compare the effects of market volatilities on Electronics Mart 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 Electronics Mart with a short position of Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronics Mart and Elin Electronics.
Diversification Opportunities for Electronics Mart and Elin Electronics
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronics and Elin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Mart India and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics and Electronics Mart 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 Electronics Mart India 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 Electronics Mart i.e., Electronics Mart and Elin Electronics go up and down completely randomly.
Pair Corralation between Electronics Mart and Elin Electronics
Assuming the 90 days trading horizon Electronics Mart India is expected to under-perform the Elin Electronics. In addition to that, Electronics Mart is 1.55 times more volatile than Elin Electronics Limited. It trades about -0.06 of its total potential returns per unit of risk. Elin Electronics Limited is currently generating about 0.03 per unit of volatility. If you would invest 21,622 in Elin Electronics Limited on September 1, 2024 and sell it today you would earn a total of 229.00 from holding Elin Electronics Limited or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronics Mart India vs. Elin Electronics Limited
Performance |
| Timeline |
| Electronics Mart India |
| Elin Electronics |
Electronics Mart and Elin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronics Mart and Elin Electronics
The main advantage of trading using opposite Electronics Mart and Elin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronics Mart 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.| Electronics Mart vs. Osia Hyper Retail | Electronics Mart vs. Shree Pushkar Chemicals | Electronics Mart vs. UFO Moviez India | Electronics Mart vs. Mangalore Chemicals Fertilizers |
| Elin Electronics vs. Reliance Industries Limited | Elin Electronics vs. HDFC Bank Limited | Elin Electronics vs. Kingfa Science Technology | Elin Electronics vs. Rico Auto Industries |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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