Correlation Between Embassy Office and Hindustan Media

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

By analyzing existing cross correlation between Embassy Office Parks and Hindustan Media Ventures, you can compare the effects of market volatilities on Embassy Office and Hindustan Media 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 Embassy Office with a short position of Hindustan Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embassy Office and Hindustan Media.

Diversification Opportunities for Embassy Office and Hindustan Media

-0.17

Correlation Coefficient

Embassy Office  Hindustan Media

Good diversification

The 3 months correlation between Embassy and Hindustan is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Embassy Office Parks and Hindustan Media Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Media Ventures and Embassy Office 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 Embassy Office Parks are associated (or correlated) with Hindustan Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Media Ventures has no effect on the direction of Embassy Office i.e., Embassy Office and Hindustan Media go up and down completely randomly.

Pair Corralation between Embassy Office and Hindustan Media

Assuming the 90 days trading horizon Embassy Office Parks is expected to generate 0.69 times more return on investment than Hindustan Media. However, Embassy Office Parks is 1.44 times less risky than Hindustan Media. It trades about -0.05 of its potential returns per unit of risk. Hindustan Media Ventures is currently generating about -0.16 per unit of risk. If you would invest  37,800  in Embassy Office Parks on October 11, 2024 and sell it today you would lose (662.00) from holding Embassy Office Parks or give up 1.75% of portfolio value over 90 days.

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

Embassy Office Parks  vs.  Hindustan Media Ventures

Embassy Office Parks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embassy Office Parks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Embassy Office is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Hindustan Media Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Embassy Office and Hindustan Media

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

The idea behind Embassy Office Parks and Hindustan Media Ventures 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.