Correlation Between Aster DM and Eros International

Can any of the company-specific risk be diversified away by investing in both Aster DM and Eros International 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 Aster DM and Eros International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aster DM Healthcare and Eros International Media, you can compare the effects of market volatilities on Aster DM 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 Aster DM with a short position of Eros International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aster DM and Eros International.

Diversification Opportunities for Aster DM and Eros International

0.83

Correlation Coefficient

Aster DM  Eros International

Very poor diversification

The 3 months correlation between Aster and Eros is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Aster DM Healthcare 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 Aster DM 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 Aster DM Healthcare 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 Aster DM i.e., Aster DM and Eros International go up and down completely randomly.

Pair Corralation between Aster DM and Eros International

Assuming the 90 days trading horizon Aster DM Healthcare is expected to generate 1.01 times more return on investment than Eros International. However, Aster DM is 1.01 times more volatile than Eros International Media. It trades about -0.04 of its potential returns per unit of risk. Eros International Media is currently generating about -0.48 per unit of risk. If you would invest  51,466  in Aster DM Healthcare on December 30, 2024 and sell it today you would lose (3,116) from holding Aster DM Healthcare or give up 6.05% of portfolio value over 90 days.

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

Aster DM Healthcare  vs.  Eros International Media

Aster DM Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aster DM Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aster DM is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Eros International Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eros International Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Aster DM and Eros International

The main advantage of trading using opposite Aster DM and Eros International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aster DM 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 Aster DM Healthcare 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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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.