Correlation Between VA Tech and Electronics Mart
Can any of the company-specific risk be diversified away by investing in both VA Tech and Electronics Mart 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 VA Tech and Electronics Mart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VA Tech Wabag and Electronics Mart India, you can compare the effects of market volatilities on VA Tech and Electronics Mart 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 VA Tech with a short position of Electronics Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of VA Tech and Electronics Mart.
Diversification Opportunities for VA Tech and Electronics Mart
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WABAG and Electronics is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding VA Tech Wabag and Electronics Mart India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronics Mart India and VA Tech 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 VA Tech Wabag are associated (or correlated) with Electronics Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronics Mart India has no effect on the direction of VA Tech i.e., VA Tech and Electronics Mart go up and down completely randomly.
Pair Corralation between VA Tech and Electronics Mart
Assuming the 90 days trading horizon VA Tech Wabag is expected to generate 1.07 times more return on investment than Electronics Mart. However, VA Tech is 1.07 times more volatile than Electronics Mart India. It trades about 0.1 of its potential returns per unit of risk. Electronics Mart India is currently generating about -0.12 per unit of risk. If you would invest 151,050 in VA Tech Wabag on August 29, 2024 and sell it today you would earn a total of 17,805 from holding VA Tech Wabag or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VA Tech Wabag vs. Electronics Mart India
Performance |
| Timeline |
| VA Tech Wabag |
| Electronics Mart India |
VA Tech and Electronics Mart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VA Tech and Electronics Mart
The main advantage of trading using opposite VA Tech and Electronics Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VA Tech position performs unexpectedly, Electronics Mart 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 Electronics Mart will offset losses from the drop in Electronics Mart's long position.| VA Tech vs. Reliance Industries Limited | VA Tech vs. State Bank of | VA Tech vs. HDFC Bank Limited | VA Tech vs. Oil Natural Gas |
| Electronics Mart vs. Hemisphere Properties India | Electronics Mart vs. India Glycols Limited | Electronics Mart vs. Indo Borax Chemicals | Electronics Mart vs. Kingfa Science 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |