Correlation Between Cyber Media and India Glycols

Can any of the company-specific risk be diversified away by investing in both Cyber Media and India Glycols 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 Cyber Media and India Glycols into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cyber Media Research and India Glycols Limited, you can compare the effects of market volatilities on Cyber Media and India Glycols 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 Cyber Media with a short position of India Glycols. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyber Media and India Glycols.

Diversification Opportunities for Cyber Media and India Glycols

-0.38

Correlation Coefficient

Cyber Media  India Glycols

Very good diversification

The 3 months correlation between Cyber and India is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cyber Media Research and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols Limited and Cyber Media 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 Cyber Media Research are associated (or correlated) with India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of Cyber Media i.e., Cyber Media and India Glycols go up and down completely randomly.

Pair Corralation between Cyber Media and India Glycols

Assuming the 90 days trading horizon Cyber Media is expected to generate 2.8 times less return on investment than India Glycols. In addition to that, Cyber Media is 1.66 times more volatile than India Glycols Limited. It trades about 0.07 of its total potential returns per unit of risk. India Glycols Limited is currently generating about 0.3 per unit of volatility. If you would invest  113,300  in India Glycols Limited on September 23, 2024 and sell it today you would earn a total of  19,810  from holding India Glycols Limited or generate 17.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cyber Media Research  vs.  India Glycols Limited

Cyber Media Research

Risk-Adjusted Performance

0 of 100

Very Weak

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

India Glycols Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in India Glycols Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, India Glycols is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cyber Media and India Glycols

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

The idea behind Cyber Media Research and India Glycols Limited 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.