Correlation Between ITD Cementation and Diligent Media

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

By analyzing existing cross correlation between ITD Cementation India and Diligent Media, you can compare the effects of market volatilities on ITD Cementation and Diligent Media 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 ITD Cementation with a short position of Diligent Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITD Cementation and Diligent Media.

Diversification Opportunities for ITD Cementation and Diligent Media

-0.17

Correlation Coefficient

ITD Cementation  Diligent Media

Good diversification

The 3 months correlation between ITD and Diligent is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding ITD Cementation India and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media and ITD Cementation 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 ITD Cementation India are associated (or correlated) with Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of ITD Cementation i.e., ITD Cementation and Diligent Media go up and down completely randomly.

Pair Corralation between ITD Cementation and Diligent Media

Assuming the 90 days trading horizon ITD Cementation India is expected to generate 0.26 times more return on investment than Diligent Media. However, ITD Cementation India is 3.8 times less risky than Diligent Media. It trades about 0.08 of its potential returns per unit of risk. Diligent Media is currently generating about -0.05 per unit of risk. If you would invest  53,040  in ITD Cementation India on December 26, 2024 and sell it today you would earn a total of  3,015  from holding ITD Cementation India or generate 5.68% return on investment over 90 days.

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

ITD Cementation India  vs.  Diligent Media

ITD Cementation India

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ITD Cementation India are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, ITD Cementation is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Diligent Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diligent Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with ITD Cementation and Diligent Media

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

The idea behind ITD Cementation India and Diligent 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.