Correlation Between ITI and MIC Electronics
Can any of the company-specific risk be diversified away by investing in both ITI and MIC Electronics 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 ITI and MIC Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITI Limited and MIC Electronics Limited, you can compare the effects of market volatilities on ITI and MIC 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 ITI with a short position of MIC Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITI and MIC Electronics.
Diversification Opportunities for ITI and MIC Electronics
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ITI and MIC is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ITI Limited and MIC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIC Electronics and ITI 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 ITI Limited are associated (or correlated) with MIC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIC Electronics has no effect on the direction of ITI i.e., ITI and MIC Electronics go up and down completely randomly.
Pair Corralation between ITI and MIC Electronics
Assuming the 90 days trading horizon ITI Limited is expected to generate 3.2 times more return on investment than MIC Electronics. However, ITI is 3.2 times more volatile than MIC Electronics Limited. It trades about 0.07 of its potential returns per unit of risk. MIC Electronics Limited is currently generating about -0.11 per unit of risk. If you would invest 35,745 in ITI Limited on October 20, 2024 and sell it today you would earn a total of 1,865 from holding ITI Limited or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITI Limited vs. MIC Electronics Limited
Performance |
| Timeline |
| ITI Limited |
| MIC Electronics |
ITI and MIC Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITI and MIC Electronics
The main advantage of trading using opposite ITI and MIC Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITI position performs unexpectedly, MIC 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 MIC Electronics will offset losses from the drop in MIC Electronics' long position.| ITI vs. MRF Limited | ITI vs. The Orissa Minerals | ITI vs. Honeywell Automation India | ITI vs. Page Industries Limited |
| MIC Electronics vs. V2 Retail Limited | MIC Electronics vs. Silgo Retail Limited | MIC Electronics vs. LLOYDS METALS AND | MIC Electronics vs. R S Software |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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