Correlation Between MIC Electronics and Electronics Mart
Can any of the company-specific risk be diversified away by investing in both MIC Electronics 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 MIC Electronics and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MIC Electronics Limited and Electronics Mart India, you can compare the effects of market volatilities on MIC Electronics 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 MIC Electronics with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of MIC Electronics and Electronics Mart.
Diversification Opportunities for MIC Electronics and Electronics Mart
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between MIC and Electronics is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding MIC Electronics 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 MIC Electronics 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 MIC Electronics 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 MIC Electronics i.e., MIC Electronics and Electronics Mart go up and down completely randomly.
Pair Corralation between MIC Electronics and Electronics Mart
Assuming the 90 days trading horizon MIC Electronics Limited is expected to generate 1.22 times more return on investment than Electronics Mart. However, MIC Electronics is 1.22 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 0.01 per unit of risk. If you would invest 3,980 in MIC Electronics Limited on August 25, 2024 and sell it today you would earn a total of 4,354 from holding MIC Electronics Limited or generate 109.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MIC Electronics Limited vs. Electronics Mart India
Performance |
| Timeline |
| MIC Electronics |
| Electronics Mart India |
MIC Electronics and Electronics Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MIC Electronics and Electronics Mart
The main advantage of trading using opposite MIC Electronics and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MIC Electronics 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.| MIC Electronics vs. Life Insurance | MIC Electronics vs. Power Finance | MIC Electronics vs. HDFC Bank Limited | MIC Electronics vs. State Bank of |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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