Correlation Between Emkay Global and Hindustan Media

Can any of the company-specific risk be diversified away by investing in both Emkay Global 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 Emkay Global and Hindustan Media 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 Hindustan Media Ventures, you can compare the effects of market volatilities on Emkay Global 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 Emkay Global with a short position of Hindustan Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emkay Global and Hindustan Media.

Diversification Opportunities for Emkay Global and Hindustan Media

0.25

Correlation Coefficient

Emkay Global  Hindustan Media

Modest diversification

The 3 months correlation between Emkay and Hindustan is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Emkay Global Financial 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 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 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 Emkay Global i.e., Emkay Global and Hindustan Media go up and down completely randomly.

Pair Corralation between Emkay Global and Hindustan Media

Assuming the 90 days trading horizon Emkay Global Financial is expected to under-perform the Hindustan Media. But the stock apears to be less risky and, when comparing its historical volatility, Emkay Global Financial is 1.3 times less risky than Hindustan Media. The stock trades about -0.41 of its potential returns per unit of risk. The Hindustan Media Ventures is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  9,489  in Hindustan Media Ventures on October 11, 2024 and sell it today you would lose (678.00) from holding Hindustan Media Ventures or give up 7.15% of portfolio value over 90 days.

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

Emkay Global Financial  vs.  Hindustan Media Ventures

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.

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 Emkay Global and Hindustan Media

The main advantage of trading using opposite Emkay Global and Hindustan Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emkay Global 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 Emkay Global Financial 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.