Correlation Between Entertainment Network and Electronics Mart
Can any of the company-specific risk be diversified away by investing in both Entertainment Network and Electronics Mart 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 Entertainment Network and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entertainment Network Limited and Electronics Mart India, you can compare the effects of market volatilities on Entertainment Network and Electronics Mart 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 Entertainment Network with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entertainment Network and Electronics Mart.
Diversification Opportunities for Entertainment Network and Electronics Mart
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Entertainment and Electronics is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Entertainment Network Limited and Electronics Mart India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Mart India and Entertainment Network 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 Entertainment Network Limited are associated (or correlated) with Electronics Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Mart India has no effect on the direction of Entertainment Network i.e., Entertainment Network and Electronics Mart go up and down completely randomly.
Pair Corralation between Entertainment Network and Electronics Mart
Assuming the 90 days trading horizon Entertainment Network Limited is expected to generate 1.26 times more return on investment than Electronics Mart. However, Entertainment Network is 1.26 times more volatile than Electronics Mart India. It trades about 0.0 of its potential returns per unit of risk. Electronics Mart India is currently generating about -0.02 per unit of risk. If you would invest 17,974 in Entertainment Network Limited on October 16, 2024 and sell it today you would lose (2,298) from holding Entertainment Network Limited or give up 12.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.24% |
| Values | Daily Returns |
Entertainment Network Limited vs. Electronics Mart India
Performance |
| Timeline |
| Entertainment Network |
| Electronics Mart India |
Entertainment Network and Electronics Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entertainment Network and Electronics Mart
The main advantage of trading using opposite Entertainment Network and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entertainment Network position performs unexpectedly, Electronics Mart 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 Electronics Mart will offset losses from the drop in Electronics Mart's long position.The idea behind Entertainment Network Limited and Electronics Mart India pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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