Correlation Between E Mart and NH Investment

Can any of the company-specific risk be diversified away by investing in both E Mart and NH Investment 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 E Mart and NH Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E Mart and NH Investment Securities, you can compare the effects of market volatilities on E Mart and NH Investment 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 E Mart with a short position of NH Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Mart and NH Investment.

Diversification Opportunities for E Mart and NH Investment

0.47

Correlation Coefficient

E Mart  NH Investment

Very weak diversification

The 3 months correlation between 139480 and 005940 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding E Mart and NH Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Investment Securities and E Mart 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 E Mart are associated (or correlated) with NH Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Investment Securities has no effect on the direction of E Mart i.e., E Mart and NH Investment go up and down completely randomly.

Pair Corralation between E Mart and NH Investment

Assuming the 90 days trading horizon E Mart is expected to generate 1.45 times more return on investment than NH Investment. However, E Mart is 1.45 times more volatile than NH Investment Securities. It trades about 0.07 of its potential returns per unit of risk. NH Investment Securities is currently generating about 0.06 per unit of risk. If you would invest  5,770,000  in E Mart on September 29, 2024 and sell it today you would earn a total of  1,040,000  from holding E Mart or generate 18.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

E Mart  vs.  NH Investment Securities

E Mart

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in E Mart are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, E Mart sustained solid returns over the last few months and may actually be approaching a breakup point.

NH Investment Securities

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NH Investment Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NH Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with E Mart and NH Investment

The main advantage of trading using opposite E Mart and NH Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Mart position performs unexpectedly, NH Investment 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 NH Investment will offset losses from the drop in NH Investment's long position.

The idea behind E Mart and NH Investment Securities 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.