Correlation Between EIH Associated and NIIT LEARNING

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Can any of the company-specific risk be diversified away by investing in both EIH Associated and NIIT LEARNING 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 EIH Associated and NIIT LEARNING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIH Associated Hotels and NIIT LEARNING SYSTEMS, you can compare the effects of market volatilities on EIH Associated and NIIT LEARNING 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 EIH Associated with a short position of NIIT LEARNING. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIH Associated and NIIT LEARNING.

Diversification Opportunities for EIH Associated and NIIT LEARNING

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between EIH and NIIT is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EIH Associated Hotels and NIIT LEARNING SYSTEMS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIIT LEARNING SYSTEMS and EIH Associated 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 EIH Associated Hotels are associated (or correlated) with NIIT LEARNING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIIT LEARNING SYSTEMS has no effect on the direction of EIH Associated i.e., EIH Associated and NIIT LEARNING go up and down completely randomly.

Pair Corralation between EIH Associated and NIIT LEARNING

Assuming the 90 days trading horizon EIH Associated Hotels is expected to generate 0.91 times more return on investment than NIIT LEARNING. However, EIH Associated Hotels is 1.1 times less risky than NIIT LEARNING. It trades about 0.03 of its potential returns per unit of risk. NIIT LEARNING SYSTEMS is currently generating about -0.01 per unit of risk. If you would invest  40,930  in EIH Associated Hotels on September 15, 2024 and sell it today you would earn a total of  1,060  from holding EIH Associated Hotels or generate 2.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

EIH Associated Hotels  vs.  NIIT LEARNING SYSTEMS

 Performance 
       Timeline  
EIH Associated Hotels 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in EIH Associated Hotels are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, EIH Associated is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
NIIT LEARNING SYSTEMS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NIIT LEARNING SYSTEMS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, NIIT LEARNING is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

EIH Associated and NIIT LEARNING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EIH Associated and NIIT LEARNING

The main advantage of trading using opposite EIH Associated and NIIT LEARNING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIH Associated position performs unexpectedly, NIIT LEARNING 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 NIIT LEARNING will offset losses from the drop in NIIT LEARNING's long position.
The idea behind EIH Associated Hotels and NIIT LEARNING SYSTEMS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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