Correlation Between Industrial Investment and Entertainment Network

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

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

Diversification Opportunities for Industrial Investment and Entertainment Network

0.12

Correlation Coefficient

Industrial Investment  Entertainment Network

Average diversification

The 3 months correlation between Industrial and Entertainment is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Investment Trust and Entertainment Network Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entertainment Network and Industrial Investment 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 Industrial Investment Trust 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 Industrial Investment i.e., Industrial Investment and Entertainment Network go up and down completely randomly.

Pair Corralation between Industrial Investment and Entertainment Network

Assuming the 90 days trading horizon Industrial Investment Trust is expected to generate 1.31 times more return on investment than Entertainment Network. However, Industrial Investment is 1.31 times more volatile than Entertainment Network Limited. It trades about 0.11 of its potential returns per unit of risk. Entertainment Network Limited is currently generating about -0.08 per unit of risk. If you would invest  31,935  in Industrial Investment Trust on October 25, 2024 and sell it today you would earn a total of  6,155  from holding Industrial Investment Trust or generate 19.27% return on investment over 90 days.

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

Industrial Investment Trust  vs.  Entertainment Network Limited

Industrial Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Industrial Investment and Entertainment Network

The main advantage of trading using opposite Industrial Investment and Entertainment Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Investment 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 Industrial Investment Trust 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.