Correlation Between Hindustan Media and Entertainment Network

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

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

Diversification Opportunities for Hindustan Media and Entertainment Network

0.78

Correlation Coefficient

Hindustan Media  Entertainment Network

Poor diversification

The 3 months correlation between Hindustan and Entertainment is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Media Ventures and Entertainment Network Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entertainment Network and Hindustan Media 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 Hindustan Media Ventures are associated (or correlated) with Entertainment Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entertainment Network has no effect on the direction of Hindustan Media i.e., Hindustan Media and Entertainment Network go up and down completely randomly.

Pair Corralation between Hindustan Media and Entertainment Network

Assuming the 90 days trading horizon Hindustan Media Ventures is expected to generate 0.78 times more return on investment than Entertainment Network. However, Hindustan Media Ventures is 1.28 times less risky than Entertainment Network. It trades about 0.01 of its potential returns per unit of risk. Entertainment Network Limited is currently generating about -0.04 per unit of risk. If you would invest  9,120  in Hindustan Media Ventures on September 5, 2024 and sell it today you would lose (3.00) from holding Hindustan Media Ventures or give up 0.03% of portfolio value over 90 days.

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

Hindustan Media Ventures  vs.  Entertainment Network Limited

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

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 unsteady 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.

Pair Trading with Hindustan Media and Entertainment Network

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

The idea behind Hindustan Media Ventures and Entertainment Network Limited 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.