Correlation Between Hindware Home and Eros International

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

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

Diversification Opportunities for Hindware Home and Eros International

0.73

Correlation Coefficient

Hindware Home  Eros International

Poor diversification

The 3 months correlation between Hindware and Eros is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hindware Home Innovation 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 Hindware Home 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 Hindware Home Innovation 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 Hindware Home i.e., Hindware Home and Eros International go up and down completely randomly.

Pair Corralation between Hindware Home and Eros International

Assuming the 90 days trading horizon Hindware Home Innovation is expected to generate 1.13 times more return on investment than Eros International. However, Hindware Home is 1.13 times more volatile than Eros International Media. It trades about -0.08 of its potential returns per unit of risk. Eros International Media is currently generating about -0.21 per unit of risk. If you would invest  28,865  in Hindware Home Innovation on October 25, 2024 and sell it today you would lose (3,720) from holding Hindware Home Innovation or give up 12.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Hindware Home Innovation  vs.  Eros International Media

Hindware Home Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindware Home Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail 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 weak 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.

Pair Trading with Hindware Home and Eros International

The main advantage of trading using opposite Hindware Home and Eros International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hindware Home 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 Hindware Home Innovation 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.