Correlation Between HT Media and ILFS Investment

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

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

Diversification Opportunities for HT Media and ILFS Investment

0.48

Correlation Coefficient

HT Media  ILFS Investment

Very weak diversification

The 3 months correlation between HTMEDIA and ILFS is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding HT Media Limited and ILFS Investment Managers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ILFS Investment Managers and HT 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 HT Media Limited are associated (or correlated) with ILFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ILFS Investment Managers has no effect on the direction of HT Media i.e., HT Media and ILFS Investment go up and down completely randomly.

Pair Corralation between HT Media and ILFS Investment

Assuming the 90 days trading horizon HT Media is expected to generate 2.61 times less return on investment than ILFS Investment. But when comparing it to its historical volatility, HT Media Limited is 1.14 times less risky than ILFS Investment. It trades about 0.02 of its potential returns per unit of risk. ILFS Investment Managers is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  636.00  in ILFS Investment Managers on September 20, 2024 and sell it today you would earn a total of  489.00  from holding ILFS Investment Managers or generate 76.89% return on investment over 90 days.

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

HT Media Limited  vs.  ILFS Investment Managers

HT Media Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HT Media Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, HT Media is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

ILFS Investment Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ILFS Investment Managers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ILFS Investment is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with HT Media and ILFS Investment

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

The idea behind HT Media Limited and ILFS Investment Managers 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.