Correlation Between Everest and Investcorp India

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

By analyzing existing cross correlation between Everest Group and Investcorp India Acquisition, you can compare the effects of market volatilities on Everest and Investcorp India 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 Everest with a short position of Investcorp India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everest and Investcorp India.

Diversification Opportunities for Everest and Investcorp India

-0.21

Correlation Coefficient

Everest  Investcorp India

Very good diversification

The 3 months correlation between Everest and Investcorp is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Everest Group and Investcorp India Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp India Acq and Everest 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 Everest Group are associated (or correlated) with Investcorp India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp India Acq has no effect on the direction of Everest i.e., Everest and Investcorp India go up and down completely randomly.

Pair Corralation between Everest and Investcorp India

Allowing for the 90-day total investment horizon Everest Group is expected to generate 2.6 times more return on investment than Investcorp India. However, Everest is 2.6 times more volatile than Investcorp India Acquisition. It trades about 0.02 of its potential returns per unit of risk. Investcorp India Acquisition is currently generating about 0.05 per unit of risk. If you would invest  35,767  in Everest Group on December 30, 2024 and sell it today you would earn a total of  432.00  from holding Everest Group or generate 1.21% return on investment over 90 days.

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

Everest Group  vs.  Investcorp India Acquisition

Everest Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Everest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Investcorp India Acq

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp India Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Investcorp India is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Everest and Investcorp India

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

The idea behind Everest Group and Investcorp India Acquisition 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.