Correlation Between Elin Electronics and Aster DM

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

By analyzing existing cross correlation between Elin Electronics Limited and Aster DM Healthcare, you can compare the effects of market volatilities on Elin Electronics and Aster DM 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 Elin Electronics with a short position of Aster DM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elin Electronics and Aster DM.

Diversification Opportunities for Elin Electronics and Aster DM

0.28

Correlation Coefficient

Elin Electronics  Aster DM

Modest diversification

The 3 months correlation between Elin and Aster is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elin Electronics Limited and Aster DM Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aster DM Healthcare and Elin Electronics 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 Elin Electronics Limited are associated (or correlated) with Aster DM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aster DM Healthcare has no effect on the direction of Elin Electronics i.e., Elin Electronics and Aster DM go up and down completely randomly.

Pair Corralation between Elin Electronics and Aster DM

Assuming the 90 days trading horizon Elin Electronics Limited is expected to under-perform the Aster DM. In addition to that, Elin Electronics is 1.53 times more volatile than Aster DM Healthcare. It trades about -0.23 of its total potential returns per unit of risk. Aster DM Healthcare is currently generating about -0.04 per unit of volatility. If you would invest  43,305  in Aster DM Healthcare on November 20, 2024 and sell it today you would lose (2,725) from holding Aster DM Healthcare or give up 6.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Elin Electronics Limited  vs.  Aster DM Healthcare

Elin Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elin Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aster DM Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aster DM Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aster DM is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Elin Electronics and Aster DM

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

The idea behind Elin Electronics Limited and Aster DM Healthcare 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.