Correlation Between Elin Electronics and India Glycols

Can any of the company-specific risk be diversified away by investing in both Elin Electronics and India Glycols 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 India Glycols 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 India Glycols Limited, you can compare the effects of market volatilities on Elin Electronics and India Glycols 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 India Glycols. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elin Electronics and India Glycols.

Diversification Opportunities for Elin Electronics and India Glycols

0.56

Correlation Coefficient

Elin Electronics  India Glycols

Very weak diversification

The 3 months correlation between Elin and India is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Elin Electronics Limited and India Glycols Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Glycols Limited 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 India Glycols. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Glycols Limited has no effect on the direction of Elin Electronics i.e., Elin Electronics and India Glycols go up and down completely randomly.

Pair Corralation between Elin Electronics and India Glycols

Assuming the 90 days trading horizon Elin Electronics is expected to generate 4.66 times less return on investment than India Glycols. In addition to that, Elin Electronics is 1.13 times more volatile than India Glycols Limited. It trades about 0.01 of its total potential returns per unit of risk. India Glycols Limited is currently generating about 0.06 per unit of volatility. If you would invest  72,537  in India Glycols Limited on October 4, 2024 and sell it today you would earn a total of  55,838  from holding India Glycols Limited or generate 76.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.18%
Values	Daily Returns

Elin Electronics Limited  vs.  India Glycols Limited

Elin Electronics

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Elin Electronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

India Glycols Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days India Glycols Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, India Glycols is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Elin Electronics and India Glycols

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

The idea behind Elin Electronics Limited and India Glycols 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.