Correlation Between Entertainment Network and Laxmi Organic
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By analyzing existing cross correlation between Entertainment Network Limited and Laxmi Organic Industries, you can compare the effects of market volatilities on Entertainment Network and Laxmi Organic 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 Laxmi Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entertainment Network and Laxmi Organic.
Diversification Opportunities for Entertainment Network and Laxmi Organic
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Entertainment and Laxmi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Entertainment Network Limited and Laxmi Organic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laxmi Organic Industries 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 Laxmi Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laxmi Organic Industries has no effect on the direction of Entertainment Network i.e., Entertainment Network and Laxmi Organic go up and down completely randomly.
Pair Corralation between Entertainment Network and Laxmi Organic
Assuming the 90 days trading horizon Entertainment Network Limited is expected to generate 0.96 times more return on investment than Laxmi Organic. However, Entertainment Network Limited is 1.04 times less risky than Laxmi Organic. It trades about -0.46 of its potential returns per unit of risk. Laxmi Organic Industries is currently generating about -0.49 per unit of risk. If you would invest 18,712 in Entertainment Network Limited on October 16, 2024 and sell it today you would lose (3,036) from holding Entertainment Network Limited or give up 16.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entertainment Network Limited vs. Laxmi Organic Industries
Performance |
| Timeline |
| Entertainment Network |
| Laxmi Organic Industries |
Entertainment Network and Laxmi Organic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entertainment Network and Laxmi Organic
The main advantage of trading using opposite Entertainment Network and Laxmi Organic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entertainment Network position performs unexpectedly, Laxmi Organic 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 Laxmi Organic will offset losses from the drop in Laxmi Organic's long position.The idea behind Entertainment Network Limited and Laxmi Organic Industries 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.
| Laxmi Organic vs. Entertainment Network Limited | Laxmi Organic vs. Hindustan Media Ventures | Laxmi Organic vs. Alkali Metals Limited | Laxmi Organic vs. Diligent Media |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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