Correlation Between Eros International and Shigan Quantum

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

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

Diversification Opportunities for Eros International and Shigan Quantum

-0.27

Correlation Coefficient

Eros International  Shigan Quantum

Very good diversification

The 3 months correlation between Eros and Shigan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eros International Media and Shigan Quantum Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shigan Quantum Tech and Eros International 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 Eros International Media are associated (or correlated) with Shigan Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shigan Quantum Tech has no effect on the direction of Eros International i.e., Eros International and Shigan Quantum go up and down completely randomly.

Pair Corralation between Eros International and Shigan Quantum

Assuming the 90 days trading horizon Eros International Media is expected to under-perform the Shigan Quantum. But the stock apears to be less risky and, when comparing its historical volatility, Eros International Media is 1.57 times less risky than Shigan Quantum. The stock trades about -0.22 of its potential returns per unit of risk. The Shigan Quantum Tech is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  11,800  in Shigan Quantum Tech on October 22, 2024 and sell it today you would lose (1,500) from holding Shigan Quantum Tech or give up 12.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Eros International Media  vs.  Shigan Quantum Tech

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 unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Shigan Quantum Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shigan Quantum Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eros International and Shigan Quantum

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

The idea behind Eros International Media and Shigan Quantum Tech 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.