Correlation Between Electronics Mart and ILFS Investment
Can any of the company-specific risk be diversified away by investing in both Electronics Mart and ILFS Investment 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 ILFS Investment 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 ILFS Investment Managers, you can compare the effects of market volatilities on Electronics Mart and ILFS Investment 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 ILFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronics Mart and ILFS Investment.
Diversification Opportunities for Electronics Mart and ILFS Investment
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electronics and ILFS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Mart India and ILFS Investment Managers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ILFS Investment Managers 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 ILFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ILFS Investment Managers has no effect on the direction of Electronics Mart i.e., Electronics Mart and ILFS Investment go up and down completely randomly.
Pair Corralation between Electronics Mart and ILFS Investment
Assuming the 90 days trading horizon Electronics Mart India is expected to under-perform the ILFS Investment. In addition to that, Electronics Mart is 1.24 times more volatile than ILFS Investment Managers. It trades about -0.15 of its total potential returns per unit of risk. ILFS Investment Managers is currently generating about 0.05 per unit of volatility. If you would invest 1,052 in ILFS Investment Managers on August 25, 2024 and sell it today you would earn a total of 23.00 from holding ILFS Investment Managers or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Electronics Mart India vs. ILFS Investment Managers
Performance |
| Timeline |
| Electronics Mart India |
| ILFS Investment Managers |
Electronics Mart and ILFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronics Mart and ILFS Investment
The main advantage of trading using opposite Electronics Mart and ILFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronics Mart position performs unexpectedly, ILFS Investment 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 ILFS Investment will offset losses from the drop in ILFS Investment's long position.| Electronics Mart vs. Kingfa Science Technology | Electronics Mart vs. Rico Auto Industries | Electronics Mart vs. GACM Technologies Limited | Electronics Mart vs. COSMO FIRST LIMITED |
| ILFS Investment vs. Sanginita Chemicals Limited | ILFS Investment vs. JGCHEMICALS LIMITED | ILFS Investment vs. Cantabil Retail India | ILFS Investment vs. Electronics Mart India |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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