Correlation Between Network18 Media and Indian Metals

Can any of the company-specific risk be diversified away by investing in both Network18 Media and Indian Metals 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 Network18 Media and Indian Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network18 Media Investments and Indian Metals Ferro, you can compare the effects of market volatilities on Network18 Media and Indian Metals 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 Network18 Media with a short position of Indian Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network18 Media and Indian Metals.

Diversification Opportunities for Network18 Media and Indian Metals

-0.32

Correlation Coefficient

Network18 Media  Indian Metals

Very good diversification

The 3 months correlation between Network18 and Indian is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Network18 Media Investments and Indian Metals Ferro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Metals Ferro and Network18 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 Network18 Media Investments are associated (or correlated) with Indian Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Metals Ferro has no effect on the direction of Network18 Media i.e., Network18 Media and Indian Metals go up and down completely randomly.

Pair Corralation between Network18 Media and Indian Metals

Assuming the 90 days trading horizon Network18 Media Investments is expected to under-perform the Indian Metals. In addition to that, Network18 Media is 1.25 times more volatile than Indian Metals Ferro. It trades about -0.07 of its total potential returns per unit of risk. Indian Metals Ferro is currently generating about 0.18 per unit of volatility. If you would invest  65,274  in Indian Metals Ferro on August 31, 2024 and sell it today you would earn a total of  18,786  from holding Indian Metals Ferro or generate 28.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Network18 Media Investments  vs.  Indian Metals Ferro

Network18 Media Inve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network18 Media Investments 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 forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Indian Metals Ferro

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Indian Metals Ferro are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indian Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Network18 Media and Indian Metals

The main advantage of trading using opposite Network18 Media and Indian Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network18 Media position performs unexpectedly, Indian Metals 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 Indian Metals will offset losses from the drop in Indian Metals' long position.

The idea behind Network18 Media Investments and Indian Metals Ferro 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.