Correlation Between Retail Estates and EVS Broadcast

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

By analyzing existing cross correlation between Retail Estates and EVS Broadcast Equipment, you can compare the effects of market volatilities on Retail Estates and EVS Broadcast 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 Retail Estates with a short position of EVS Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and EVS Broadcast.

Diversification Opportunities for Retail Estates and EVS Broadcast

0.65

Correlation Coefficient

Retail Estates  EVS Broadcast

Poor diversification

The 3 months correlation between Retail and EVS is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment and Retail Estates 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 Retail Estates are associated (or correlated) with EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Retail Estates i.e., Retail Estates and EVS Broadcast go up and down completely randomly.

Pair Corralation between Retail Estates and EVS Broadcast

Assuming the 90 days trading horizon Retail Estates is expected to generate 10.55 times less return on investment than EVS Broadcast. But when comparing it to its historical volatility, Retail Estates is 1.55 times less risky than EVS Broadcast. It trades about 0.03 of its potential returns per unit of risk. EVS Broadcast Equipment is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,090  in EVS Broadcast Equipment on December 29, 2024 and sell it today you would earn a total of  705.00  from holding EVS Broadcast Equipment or generate 22.82% return on investment over 90 days.

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

Retail Estates   vs.  EVS Broadcast Equipment

Retail Estates

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Retail Estates are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Retail Estates is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

EVS Broadcast Equipment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EVS Broadcast reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Retail Estates and EVS Broadcast

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

The idea behind Retail Estates and EVS Broadcast Equipment 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.