Correlation Between Selan Exploration and Elin Electronics
Can any of the company-specific risk be diversified away by investing in both Selan Exploration 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 Selan Exploration and Elin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selan Exploration Technology and Elin Electronics Limited, you can compare the effects of market volatilities on Selan Exploration 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 Selan Exploration with a short position of Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selan Exploration and Elin Electronics.
Diversification Opportunities for Selan Exploration and Elin Electronics
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Selan and Elin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Selan Exploration Technology and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics and Selan Exploration 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 Selan Exploration Technology 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 Selan Exploration i.e., Selan Exploration and Elin Electronics go up and down completely randomly.
Pair Corralation between Selan Exploration and Elin Electronics
Assuming the 90 days trading horizon Selan Exploration Technology is expected to generate 0.96 times more return on investment than Elin Electronics. However, Selan Exploration Technology is 1.04 times less risky than Elin Electronics. It trades about -0.01 of its potential returns per unit of risk. Elin Electronics Limited is currently generating about -0.14 per unit of risk. If you would invest 85,275 in Selan Exploration Technology on October 18, 2024 and sell it today you would lose (4,995) from holding Selan Exploration Technology or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selan Exploration Technology vs. Elin Electronics Limited
Performance |
| Timeline |
| Selan Exploration |
| Elin Electronics |
Selan Exploration and Elin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selan Exploration and Elin Electronics
The main advantage of trading using opposite Selan Exploration and Elin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selan Exploration 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.| Selan Exploration vs. The Indian Hotels | Selan Exploration vs. Blue Coast Hotels | Selan Exploration vs. Apex Frozen Foods | Selan Exploration vs. Patanjali Foods Limited |
| Elin Electronics vs. Kalyani Investment | Elin Electronics vs. Syrma SGS Technology | Elin Electronics vs. Sonata Software Limited | Elin Electronics vs. Selan Exploration Technology |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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