Correlation Between E2E Networks and Spandana Sphoorty

Can any of the company-specific risk be diversified away by investing in both E2E Networks and Spandana Sphoorty 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 E2E Networks and Spandana Sphoorty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E2E Networks Limited and Spandana Sphoorty Financial, you can compare the effects of market volatilities on E2E Networks and Spandana Sphoorty 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 E2E Networks with a short position of Spandana Sphoorty. Check out your portfolio center. Please also check ongoing floating volatility patterns of E2E Networks and Spandana Sphoorty.

Diversification Opportunities for E2E Networks and Spandana Sphoorty

-0.02

Correlation Coefficient

E2E Networks  Spandana Sphoorty

Good diversification

The 3 months correlation between E2E and Spandana is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding E2E Networks Limited and Spandana Sphoorty Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spandana Sphoorty and E2E Networks 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 E2E Networks Limited are associated (or correlated) with Spandana Sphoorty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spandana Sphoorty has no effect on the direction of E2E Networks i.e., E2E Networks and Spandana Sphoorty go up and down completely randomly.

Pair Corralation between E2E Networks and Spandana Sphoorty

Assuming the 90 days trading horizon E2E Networks Limited is expected to generate 1.21 times more return on investment than Spandana Sphoorty. However, E2E Networks is 1.21 times more volatile than Spandana Sphoorty Financial. It trades about 0.19 of its potential returns per unit of risk. Spandana Sphoorty Financial is currently generating about -0.02 per unit of risk. If you would invest  17,305  in E2E Networks Limited on October 26, 2024 and sell it today you would earn a total of  314,060  from holding E2E Networks Limited or generate 1814.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

E2E Networks Limited  vs.  Spandana Sphoorty Financial

E2E Networks Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E2E Networks Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, E2E Networks is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Spandana Sphoorty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spandana Sphoorty Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with E2E Networks and Spandana Sphoorty

The main advantage of trading using opposite E2E Networks and Spandana Sphoorty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E2E Networks position performs unexpectedly, Spandana Sphoorty 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 Spandana Sphoorty will offset losses from the drop in Spandana Sphoorty's long position.

The idea behind E2E Networks Limited and Spandana Sphoorty Financial 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.