Correlation Between Touchwood Entertainment and Eros International
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By analyzing existing cross correlation between Touchwood Entertainment Limited and Eros International Media, you can compare the effects of market volatilities on Touchwood Entertainment and Eros International 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 Touchwood Entertainment with a short position of Eros International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchwood Entertainment and Eros International.
Diversification Opportunities for Touchwood Entertainment and Eros International
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Touchwood and Eros is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Touchwood Entertainment Limite and Eros International Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros International Media and Touchwood Entertainment 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 Touchwood Entertainment Limited are associated (or correlated) with Eros International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros International Media has no effect on the direction of Touchwood Entertainment i.e., Touchwood Entertainment and Eros International go up and down completely randomly.
Pair Corralation between Touchwood Entertainment and Eros International
Assuming the 90 days trading horizon Touchwood Entertainment Limited is expected to under-perform the Eros International. In addition to that, Touchwood Entertainment is 2.0 times more volatile than Eros International Media. It trades about -0.19 of its total potential returns per unit of risk. Eros International Media is currently generating about -0.31 per unit of volatility. If you would invest 1,528 in Eros International Media on October 10, 2024 and sell it today you would lose (159.00) from holding Eros International Media or give up 10.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Touchwood Entertainment Limite vs. Eros International Media
Performance |
| Timeline |
| Touchwood Entertainment |
| Eros International Media |
Touchwood Entertainment and Eros International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Touchwood Entertainment and Eros International
The main advantage of trading using opposite Touchwood Entertainment and Eros International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Touchwood Entertainment position performs unexpectedly, Eros International 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 Eros International will offset losses from the drop in Eros International's long position.The idea behind Touchwood Entertainment Limited and Eros International Media 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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