Correlation Between Entertainment Network and Eros International

Can any of the company-specific risk be diversified away by investing in both Entertainment Network and Eros International 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 Entertainment Network and Eros International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Entertainment Network Limited and Eros International Media, you can compare the effects of market volatilities on Entertainment Network and Eros International 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 Entertainment Network with a short position of Eros International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entertainment Network and Eros International.

Diversification Opportunities for Entertainment Network and Eros International

0.84

Correlation Coefficient

Entertainment Network  Eros International

Very poor diversification

The 3 months correlation between Entertainment and Eros is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Entertainment Network Limited and Eros International Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros International Media and Entertainment Network 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 Entertainment Network Limited are associated (or correlated) with Eros International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros International Media has no effect on the direction of Entertainment Network i.e., Entertainment Network and Eros International go up and down completely randomly.

Pair Corralation between Entertainment Network and Eros International

Assuming the 90 days trading horizon Entertainment Network Limited is expected to generate 0.92 times more return on investment than Eros International. However, Entertainment Network Limited is 1.08 times less risky than Eros International. It trades about -0.07 of its potential returns per unit of risk. Eros International Media is currently generating about -0.08 per unit of risk. If you would invest  20,483  in Entertainment Network Limited on September 23, 2024 and sell it today you would lose (2,827) from holding Entertainment Network Limited or give up 13.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Entertainment Network Limited  vs.  Eros International Media

Entertainment Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entertainment Network Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Eros International Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eros International Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Entertainment Network and Eros International

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

The idea behind Entertainment Network Limited and Eros International Media 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.