Correlation Between Edelweiss Financial and Zensar Technologies

Can any of the company-specific risk be diversified away by investing in both Edelweiss Financial and Zensar Technologies 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 Edelweiss Financial and Zensar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Edelweiss Financial and Zensar Technologies

0.74

Correlation Coefficient

Edelweiss Financial  Zensar Technologies

Poor diversification

The 3 months correlation between Edelweiss and Zensar is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Edelweiss Financial Services and Zensar Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zensar Technologies and Edelweiss Financial 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 Edelweiss Financial Services are associated (or correlated) with Zensar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zensar Technologies has no effect on the direction of Edelweiss Financial i.e., Edelweiss Financial and Zensar Technologies go up and down completely randomly.

Pair Corralation between Edelweiss Financial and Zensar Technologies

Assuming the 90 days trading horizon Edelweiss Financial is expected to generate 1.08 times less return on investment than Zensar Technologies. In addition to that, Edelweiss Financial is 1.55 times more volatile than Zensar Technologies Limited. It trades about 0.05 of its total potential returns per unit of risk. Zensar Technologies Limited is currently generating about 0.08 per unit of volatility. If you would invest  68,590  in Zensar Technologies Limited on October 25, 2024 and sell it today you would earn a total of  6,415  from holding Zensar Technologies Limited or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Edelweiss Financial Services  vs.  Zensar Technologies Limited

Edelweiss Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Edelweiss Financial Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile forward indicators, Edelweiss Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Zensar Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Zensar Technologies Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Zensar Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Edelweiss Financial and Zensar Technologies

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

The idea behind Edelweiss Financial Services and Zensar Technologies 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.