Correlation Between Indian Oil and Centum Electronics
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By analyzing existing cross correlation between Indian Oil and Centum Electronics Limited, you can compare the effects of market volatilities on Indian Oil and Centum Electronics 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 Indian Oil with a short position of Centum Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indian Oil and Centum Electronics.
Diversification Opportunities for Indian Oil and Centum Electronics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indian and Centum is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Indian Oil and Centum Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centum Electronics and Indian Oil 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 Indian Oil are associated (or correlated) with Centum Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centum Electronics has no effect on the direction of Indian Oil i.e., Indian Oil and Centum Electronics go up and down completely randomly.
Pair Corralation between Indian Oil and Centum Electronics
Assuming the 90 days trading horizon Indian Oil is expected to under-perform the Centum Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Indian Oil is 1.7 times less risky than Centum Electronics. The stock trades about -0.22 of its potential returns per unit of risk. The Centum Electronics Limited is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 175,710 in Centum Electronics Limited on September 13, 2024 and sell it today you would lose (9,395) from holding Centum Electronics Limited or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indian Oil vs. Centum Electronics Limited
Performance |
| Timeline |
| Indian Oil |
| Centum Electronics |
Indian Oil and Centum Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indian Oil and Centum Electronics
The main advantage of trading using opposite Indian Oil and Centum Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indian Oil position performs unexpectedly, Centum Electronics 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 Centum Electronics will offset losses from the drop in Centum Electronics' long position.| Indian Oil vs. Kalyani Investment | Indian Oil vs. Praxis Home Retail | Indian Oil vs. The Investment Trust | Indian Oil vs. Nalwa Sons Investments |
| Centum Electronics vs. Vodafone Idea Limited | Centum Electronics vs. Yes Bank Limited | Centum Electronics vs. Indian Overseas Bank | Centum Electronics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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