Correlation Between Eros International and Byke Hospitality
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By analyzing existing cross correlation between Eros International Media and The Byke Hospitality, you can compare the effects of market volatilities on Eros International and Byke Hospitality 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 Eros International with a short position of Byke Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros International and Byke Hospitality.
Diversification Opportunities for Eros International and Byke Hospitality
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eros and Byke is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Eros International Media and The Byke Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byke Hospitality and Eros International 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 Eros International Media are associated (or correlated) with Byke Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byke Hospitality has no effect on the direction of Eros International i.e., Eros International and Byke Hospitality go up and down completely randomly.
Pair Corralation between Eros International and Byke Hospitality
Assuming the 90 days trading horizon Eros International Media is expected to under-perform the Byke Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Eros International Media is 1.41 times less risky than Byke Hospitality. The stock trades about -0.17 of its potential returns per unit of risk. The The Byke Hospitality is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 6,151 in The Byke Hospitality on August 28, 2024 and sell it today you would earn a total of 1,139 from holding The Byke Hospitality or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eros International Media vs. The Byke Hospitality
Performance |
| Timeline |
| Eros International Media |
| Byke Hospitality |
Eros International and Byke Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eros International and Byke Hospitality
The main advantage of trading using opposite Eros International and Byke Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros International position performs unexpectedly, Byke Hospitality 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 Byke Hospitality will offset losses from the drop in Byke Hospitality's long position.The idea behind Eros International Media and The Byke Hospitality 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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