Correlation Between ITI and EID Parry

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

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

Diversification Opportunities for ITI and EID Parry

0.42

Correlation Coefficient

ITI  EID Parry

Very weak diversification

The 3 months correlation between ITI and EID is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ITI Limited and EID Parry India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EID Parry India and ITI 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 ITI Limited are associated (or correlated) with EID Parry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EID Parry India has no effect on the direction of ITI i.e., ITI and EID Parry go up and down completely randomly.

Pair Corralation between ITI and EID Parry

Assuming the 90 days trading horizon ITI Limited is expected to generate 2.57 times more return on investment than EID Parry. However, ITI is 2.57 times more volatile than EID Parry India. It trades about 0.01 of its potential returns per unit of risk. EID Parry India is currently generating about -0.15 per unit of risk. If you would invest  28,663  in ITI Limited on November 29, 2024 and sell it today you would lose (1,403) from holding ITI Limited or give up 4.89% of portfolio value over 90 days.

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

ITI Limited  vs.  EID Parry India

ITI Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ITI Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ITI is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

EID Parry India

Risk-Adjusted Performance

Very Weak

Over the last 90 days EID Parry India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ITI and EID Parry

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

The idea behind ITI Limited and EID Parry India 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.