Correlation Between Paramount Communications and Exide Industries
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By analyzing existing cross correlation between Paramount Communications Limited and Exide Industries Limited, you can compare the effects of market volatilities on Paramount Communications and Exide Industries 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 Paramount Communications with a short position of Exide Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Communications and Exide Industries.
Diversification Opportunities for Paramount Communications and Exide Industries
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Paramount and Exide is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and Exide Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exide Industries and Paramount Communications 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 Paramount Communications Limited are associated (or correlated) with Exide Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exide Industries has no effect on the direction of Paramount Communications i.e., Paramount Communications and Exide Industries go up and down completely randomly.
Pair Corralation between Paramount Communications and Exide Industries
Assuming the 90 days trading horizon Paramount Communications Limited is expected to under-perform the Exide Industries. In addition to that, Paramount Communications is 1.18 times more volatile than Exide Industries Limited. It trades about -0.04 of its total potential returns per unit of risk. Exide Industries Limited is currently generating about 0.07 per unit of volatility. If you would invest 44,505 in Exide Industries Limited on September 5, 2024 and sell it today you would earn a total of 1,050 from holding Exide Industries Limited or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Paramount Communications Limit vs. Exide Industries Limited
Performance |
| Timeline |
| Paramount Communications |
| Exide Industries |
Paramount Communications and Exide Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Communications and Exide Industries
The main advantage of trading using opposite Paramount Communications and Exide Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Communications position performs unexpectedly, Exide Industries 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 Exide Industries will offset losses from the drop in Exide Industries' long position.The idea behind Paramount Communications Limited and Exide Industries Limited 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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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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