Correlation Between Diligent Media and Electrosteel Castings

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

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

Diversification Opportunities for Diligent Media and Electrosteel Castings

-0.29

Correlation Coefficient

Diligent Media  Electrosteel Castings

Very good diversification

The 3 months correlation between Diligent and Electrosteel is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Diligent Media and Electrosteel Castings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrosteel Castings and Diligent 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 Diligent Media are associated (or correlated) with Electrosteel Castings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrosteel Castings has no effect on the direction of Diligent Media i.e., Diligent Media and Electrosteel Castings go up and down completely randomly.

Pair Corralation between Diligent Media and Electrosteel Castings

Assuming the 90 days trading horizon Diligent Media is expected to generate 1.27 times less return on investment than Electrosteel Castings. In addition to that, Diligent Media is 1.02 times more volatile than Electrosteel Castings Limited. It trades about 0.07 of its total potential returns per unit of risk. Electrosteel Castings Limited is currently generating about 0.09 per unit of volatility. If you would invest  5,354  in Electrosteel Castings Limited on October 3, 2024 and sell it today you would earn a total of  8,575  from holding Electrosteel Castings Limited or generate 160.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.48%
Values	Daily Returns

Diligent Media  vs.  Electrosteel Castings Limited

Diligent Media

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Diligent Media are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Diligent Media demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Electrosteel Castings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electrosteel Castings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Diligent Media and Electrosteel Castings

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

The idea behind Diligent Media and Electrosteel Castings 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.