Correlation Between Tamilnad Mercantile and Elin Electronics
Can any of the company-specific risk be diversified away by investing in both Tamilnad Mercantile 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 Tamilnad Mercantile and Elin Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tamilnad Mercantile Bank and Elin Electronics Limited, you can compare the effects of market volatilities on Tamilnad Mercantile 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 Tamilnad Mercantile with a short position of Elin Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamilnad Mercantile and Elin Electronics.
Diversification Opportunities for Tamilnad Mercantile and Elin Electronics
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tamilnad and Elin is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tamilnad Mercantile Bank and Elin Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elin Electronics and Tamilnad Mercantile 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 Tamilnad Mercantile Bank 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 Tamilnad Mercantile i.e., Tamilnad Mercantile and Elin Electronics go up and down completely randomly.
Pair Corralation between Tamilnad Mercantile and Elin Electronics
Assuming the 90 days trading horizon Tamilnad Mercantile Bank is expected to generate 0.49 times more return on investment than Elin Electronics. However, Tamilnad Mercantile Bank is 2.03 times less risky than Elin Electronics. It trades about -0.03 of its potential returns per unit of risk. Elin Electronics Limited is currently generating about -0.15 per unit of risk. If you would invest 45,230 in Tamilnad Mercantile Bank on October 14, 2024 and sell it today you would lose (1,095) from holding Tamilnad Mercantile Bank or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tamilnad Mercantile Bank vs. Elin Electronics Limited
Performance |
| Timeline |
| Tamilnad Mercantile Bank |
| Elin Electronics |
Tamilnad Mercantile and Elin Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tamilnad Mercantile and Elin Electronics
The main advantage of trading using opposite Tamilnad Mercantile and Elin Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tamilnad Mercantile 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.| Tamilnad Mercantile vs. BF Investment Limited | Tamilnad Mercantile vs. Tips Music Limited | Tamilnad Mercantile vs. Cyber Media Research | Tamilnad Mercantile vs. MIRC Electronics Limited |
| Elin Electronics vs. Procter Gamble Health | Elin Electronics vs. Golden Tobacco Limited | Elin Electronics vs. Osia Hyper Retail | Elin Electronics vs. Silgo Retail 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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