Correlation Between Oil Natural and Elin Electronics
Can any of the company-specific risk be diversified away by investing in both Oil Natural and Elin 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 Oil Natural and Elin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Natural Gas and Elin Electronics Limited, you can compare the effects of market volatilities on Oil Natural and Elin 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 Oil Natural with a short position of Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and Elin Electronics.
Diversification Opportunities for Oil Natural and Elin Electronics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and Elin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics and Oil Natural 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 Oil Natural Gas are associated (or correlated) with Elin Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elin Electronics has no effect on the direction of Oil Natural i.e., Oil Natural and Elin Electronics go up and down completely randomly.
Pair Corralation between Oil Natural and Elin Electronics
Assuming the 90 days trading horizon Oil Natural Gas is expected to generate 0.75 times more return on investment than Elin Electronics. However, Oil Natural Gas is 1.34 times less risky than Elin Electronics. It trades about 0.09 of its potential returns per unit of risk. Elin Electronics Limited is currently generating about 0.06 per unit of risk. If you would invest 25,002 in Oil Natural Gas on September 13, 2024 and sell it today you would earn a total of 658.00 from holding Oil Natural Gas or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Natural Gas vs. Elin Electronics Limited
Performance |
| Timeline |
| Oil Natural Gas |
| Elin Electronics |
Oil Natural and Elin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Natural and Elin Electronics
The main advantage of trading using opposite Oil Natural and Elin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Natural position performs unexpectedly, Elin 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 Elin Electronics will offset losses from the drop in Elin Electronics' long position.| Oil Natural vs. Tata Investment | Oil Natural vs. Hi Tech Pipes Limited | Oil Natural vs. One 97 Communications | Oil Natural vs. Jindal Poly Investment |
| Elin Electronics vs. Reliance Industries Limited | Elin Electronics vs. Oil Natural Gas | Elin Electronics vs. ICICI Bank Limited | Elin Electronics vs. Bharti Airtel Limited |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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