Correlation Between Marshall Machines and Electronics Mart

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Can any of the company-specific risk be diversified away by investing in both Marshall Machines and Electronics Mart 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 Marshall Machines and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marshall Machines Limited and Electronics Mart India, you can compare the effects of market volatilities on Marshall Machines and Electronics Mart 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 Marshall Machines with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marshall Machines and Electronics Mart.

Diversification Opportunities for Marshall Machines and Electronics Mart

MarshallElectronicsDiversified AwayMarshallElectronicsDiversified Away100%
0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Marshall and Electronics is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Marshall Machines Limited and Electronics Mart India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Mart India and Marshall Machines 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 Marshall Machines Limited are associated (or correlated) with Electronics Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Mart India has no effect on the direction of Marshall Machines i.e., Marshall Machines and Electronics Mart go up and down completely randomly.

Pair Corralation between Marshall Machines and Electronics Mart

Assuming the 90 days trading horizon Marshall Machines Limited is expected to generate 1.16 times more return on investment than Electronics Mart. However, Marshall Machines is 1.16 times more volatile than Electronics Mart India. It trades about -0.1 of its potential returns per unit of risk. Electronics Mart India is currently generating about -0.34 per unit of risk. If you would invest  2,125  in Marshall Machines Limited on November 20, 2024 and sell it today you would lose (165.00) from holding Marshall Machines Limited or give up 7.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Marshall Machines Limited  vs.  Electronics Mart India

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15MARSHALL EMIL
       Timeline  
Marshall Machines 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Marshall Machines Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1820222426
Electronics Mart India 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Electronics Mart India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb130140150160170180

Marshall Machines and Electronics Mart Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.13-3.85-2.56-1.270.01.232.463.694.92 0.0350.0400.0450.0500.0550.0600.065
JavaScript chart by amCharts 3.21.15MARSHALL EMIL
       Returns  

Pair Trading with Marshall Machines and Electronics Mart

The main advantage of trading using opposite Marshall Machines and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marshall Machines position performs unexpectedly, Electronics Mart 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 Electronics Mart will offset losses from the drop in Electronics Mart's long position.
The idea behind Marshall Machines Limited and Electronics Mart India 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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