Correlation Between Emkay Global and Cholamandalam Investment

Can any of the company-specific risk be diversified away by investing in both Emkay Global and Cholamandalam Investment 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 Emkay Global and Cholamandalam Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emkay Global Financial and Cholamandalam Investment and, you can compare the effects of market volatilities on Emkay Global and Cholamandalam Investment 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 Emkay Global with a short position of Cholamandalam Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emkay Global and Cholamandalam Investment.

Diversification Opportunities for Emkay Global and Cholamandalam Investment

-0.69

Correlation Coefficient

Emkay Global  Cholamandalam Investment

Excellent diversification

The 3 months correlation between Emkay and Cholamandalam is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Emkay Global Financial and Cholamandalam Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cholamandalam Investment and Emkay Global 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 Emkay Global Financial are associated (or correlated) with Cholamandalam Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cholamandalam Investment has no effect on the direction of Emkay Global i.e., Emkay Global and Cholamandalam Investment go up and down completely randomly.

Pair Corralation between Emkay Global and Cholamandalam Investment

Assuming the 90 days trading horizon Emkay Global Financial is expected to under-perform the Cholamandalam Investment. But the stock apears to be less risky and, when comparing its historical volatility, Emkay Global Financial is 1.5 times less risky than Cholamandalam Investment. The stock trades about -0.41 of its potential returns per unit of risk. The Cholamandalam Investment and is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  133,985  in Cholamandalam Investment and on October 11, 2024 and sell it today you would lose (5,165) from holding Cholamandalam Investment and or give up 3.85% of portfolio value over 90 days.

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

Emkay Global Financial  vs.  Cholamandalam Investment and

Emkay Global Financial

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emkay Global Financial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Emkay Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Cholamandalam Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cholamandalam Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Emkay Global and Cholamandalam Investment

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

The idea behind Emkay Global Financial and Cholamandalam Investment and 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.