Correlation Between Electronics Mart and Shivalik Bimetal
Can any of the company-specific risk be diversified away by investing in both Electronics Mart and Shivalik Bimetal 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 Shivalik Bimetal 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 Shivalik Bimetal Controls, you can compare the effects of market volatilities on Electronics Mart and Shivalik Bimetal 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 Shivalik Bimetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronics Mart and Shivalik Bimetal.
Diversification Opportunities for Electronics Mart and Shivalik Bimetal
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Electronics and Shivalik is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Mart India and Shivalik Bimetal Controls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shivalik Bimetal Controls 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 Shivalik Bimetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shivalik Bimetal Controls has no effect on the direction of Electronics Mart i.e., Electronics Mart and Shivalik Bimetal go up and down completely randomly.
Pair Corralation between Electronics Mart and Shivalik Bimetal
Assuming the 90 days trading horizon Electronics Mart India is expected to under-perform the Shivalik Bimetal. But the stock apears to be less risky and, when comparing its historical volatility, Electronics Mart India is 1.17 times less risky than Shivalik Bimetal. The stock trades about -0.49 of its potential returns per unit of risk. The Shivalik Bimetal Controls is currently generating about -0.34 of returns per unit of risk over similar time horizon. If you would invest 61,225 in Shivalik Bimetal Controls on October 17, 2024 and sell it today you would lose (8,490) from holding Shivalik Bimetal Controls or give up 13.87% 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. Shivalik Bimetal Controls
Performance |
| Timeline |
| Electronics Mart India |
| Shivalik Bimetal Controls |
Electronics Mart and Shivalik Bimetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electronics Mart and Shivalik Bimetal
The main advantage of trading using opposite Electronics Mart and Shivalik Bimetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electronics Mart position performs unexpectedly, Shivalik Bimetal 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 Shivalik Bimetal will offset losses from the drop in Shivalik Bimetal's long position.| Electronics Mart vs. GM Breweries Limited | Electronics Mart vs. Praxis Home Retail | Electronics Mart vs. Embassy Office Parks | Electronics Mart vs. Zee Entertainment Enterprises |
| Shivalik Bimetal vs. Action Construction Equipment | Shivalik Bimetal vs. Elin Electronics Limited | Shivalik Bimetal vs. Centum Electronics Limited | Shivalik Bimetal 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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