Correlation Between Engineers India and Pilani Investment

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

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

Diversification Opportunities for Engineers India and Pilani Investment

-0.61

Correlation Coefficient

Engineers India  Pilani Investment

Excellent diversification

The 3 months correlation between Engineers and Pilani is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Engineers India Limited and Pilani Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pilani Investment and Engineers India 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 Engineers India Limited are associated (or correlated) with Pilani Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pilani Investment has no effect on the direction of Engineers India i.e., Engineers India and Pilani Investment go up and down completely randomly.

Pair Corralation between Engineers India and Pilani Investment

Assuming the 90 days trading horizon Engineers India is expected to generate 1.08 times less return on investment than Pilani Investment. In addition to that, Engineers India is 1.22 times more volatile than Pilani Investment and. It trades about 0.07 of its total potential returns per unit of risk. Pilani Investment and is currently generating about 0.1 per unit of volatility. If you would invest  192,002  in Pilani Investment and on September 23, 2024 and sell it today you would earn a total of  364,013  from holding Pilani Investment and or generate 189.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Engineers India Limited  vs.  Pilani Investment and

Engineers India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engineers India Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pilani Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pilani Investment and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Pilani Investment is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Engineers India and Pilani Investment

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

The idea behind Engineers India Limited and Pilani 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..