Correlation Between Elin Electronics and Indian Card

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

Diversification Opportunities for Elin Electronics and Indian Card

0.87

Correlation Coefficient

Elin Electronics  Indian Card

Very poor diversification

The 3 months correlation between Elin and Indian is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Elin Electronics Limited and Indian Card Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Card Clothing 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 Indian Card. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Card Clothing has no effect on the direction of Elin Electronics i.e., Elin Electronics and Indian Card go up and down completely randomly.

Pair Corralation between Elin Electronics and Indian Card

Assuming the 90 days trading horizon Elin Electronics Limited is expected to under-perform the Indian Card. In addition to that, Elin Electronics is 1.51 times more volatile than Indian Card Clothing. It trades about -0.07 of its total potential returns per unit of risk. Indian Card Clothing is currently generating about -0.07 per unit of volatility. If you would invest  29,155  in Indian Card Clothing on September 4, 2024 and sell it today you would lose (2,475) from holding Indian Card Clothing or give up 8.49% of portfolio value over 90 days.

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

Elin Electronics Limited  vs.  Indian Card Clothing

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 latest conflicting performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Indian Card Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indian Card Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Elin Electronics and Indian Card

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

The idea behind Elin Electronics Limited and Indian Card Clothing 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.