Correlation Between EPL and Dev Information
Can any of the company-specific risk be diversified away by investing in both EPL and Dev Information 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 EPL and Dev Information into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPL Limited and Dev Information Technology, you can compare the effects of market volatilities on EPL and Dev Information 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 EPL with a short position of Dev Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPL and Dev Information.
Diversification Opportunities for EPL and Dev Information
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EPL and Dev is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding EPL Limited and Dev Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dev Information Tech and EPL 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 EPL Limited are associated (or correlated) with Dev Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dev Information Tech has no effect on the direction of EPL i.e., EPL and Dev Information go up and down completely randomly.
Pair Corralation between EPL and Dev Information
Assuming the 90 days trading horizon EPL Limited is expected to generate 0.73 times more return on investment than Dev Information. However, EPL Limited is 1.36 times less risky than Dev Information. It trades about 0.1 of its potential returns per unit of risk. Dev Information Technology is currently generating about 0.06 per unit of risk. If you would invest 26,137 in EPL Limited on September 13, 2024 and sell it today you would earn a total of 1,513 from holding EPL Limited or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
EPL Limited vs. Dev Information Technology
Performance |
| Timeline |
| EPL Limited |
| Dev Information Tech |
EPL and Dev Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPL and Dev Information
The main advantage of trading using opposite EPL and Dev Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPL position performs unexpectedly, Dev Information 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 Dev Information will offset losses from the drop in Dev Information's long position.| EPL vs. DMCC SPECIALITY CHEMICALS | EPL vs. Sukhjit Starch Chemicals | EPL vs. Spencers Retail Limited | EPL vs. Akme Fintrade India |
| Dev Information vs. Vodafone Idea Limited | Dev Information vs. Yes Bank Limited | Dev Information vs. Indian Overseas Bank | Dev Information vs. Indian Oil |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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