Correlation Between Electronics Mart and Zensar Technologies

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

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

Diversification Opportunities for Electronics Mart and Zensar Technologies

0.34

Correlation Coefficient

Electronics Mart  Zensar Technologies

Weak diversification

The 3 months correlation between Electronics and Zensar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Mart India and Zensar Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zensar Technologies and Electronics Mart 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 Electronics Mart India are associated (or correlated) with Zensar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zensar Technologies has no effect on the direction of Electronics Mart i.e., Electronics Mart and Zensar Technologies go up and down completely randomly.

Pair Corralation between Electronics Mart and Zensar Technologies

Assuming the 90 days trading horizon Electronics Mart India is expected to under-perform the Zensar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Electronics Mart India is 1.18 times less risky than Zensar Technologies. The stock trades about -0.15 of its potential returns per unit of risk. The Zensar Technologies Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  76,112  in Zensar Technologies Limited on December 28, 2024 and sell it today you would lose (5,887) from holding Zensar Technologies Limited or give up 7.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Electronics Mart India  vs.  Zensar Technologies Limited

Electronics Mart India

Risk-Adjusted Performance

Very Weak

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

Zensar Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zensar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Zensar Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Electronics Mart and Zensar Technologies

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

The idea behind Electronics Mart India and Zensar Technologies 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.

Check out your portfolio center.

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.