Correlation Between Electronics Mart and Entertainment Network
Can any of the company-specific risk be diversified away by investing in both Electronics Mart and Entertainment Network 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 Entertainment Network 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 Entertainment Network Limited, you can compare the effects of market volatilities on Electronics Mart and Entertainment Network 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 Entertainment Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronics Mart and Entertainment Network.
Diversification Opportunities for Electronics Mart and Entertainment Network
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electronics and Entertainment is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Mart India and Entertainment Network Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entertainment Network 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 Entertainment Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entertainment Network has no effect on the direction of Electronics Mart i.e., Electronics Mart and Entertainment Network go up and down completely randomly.
Pair Corralation between Electronics Mart and Entertainment Network
Assuming the 90 days trading horizon Electronics Mart India is expected to under-perform the Entertainment Network. But the stock apears to be less risky and, when comparing its historical volatility, Electronics Mart India is 1.18 times less risky than Entertainment Network. The stock trades about -0.17 of its potential returns per unit of risk. The Entertainment Network Limited is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 14,677 in Entertainment Network Limited on December 10, 2024 and sell it today you would lose (832.00) from holding Entertainment Network Limited or give up 5.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electronics Mart India vs. Entertainment Network Limited
Performance |
| Timeline |
| Electronics Mart India |
| Entertainment Network |
Electronics Mart and Entertainment Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronics Mart and Entertainment Network
The main advantage of trading using opposite Electronics Mart and Entertainment Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronics Mart position performs unexpectedly, Entertainment Network 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 Entertainment Network will offset losses from the drop in Entertainment Network's long position.| Electronics Mart vs. Ratnamani Metals Tubes | Electronics Mart vs. Agro Tech Foods | Electronics Mart vs. Hisar Metal Industries | Electronics Mart vs. Madhav Copper Limited |
| Entertainment Network vs. Lotus Eye Hospital | Entertainment Network vs. Zota Health Care | Entertainment Network vs. UFO Moviez India | Entertainment Network vs. Centum Electronics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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