Correlation Between State Trading and Elgi Rubber

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

By analyzing existing cross correlation between The State Trading and Elgi Rubber, you can compare the effects of market volatilities on State Trading and Elgi Rubber 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 State Trading with a short position of Elgi Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Trading and Elgi Rubber.

Diversification Opportunities for State Trading and Elgi Rubber

0.13

Correlation Coefficient

State Trading  Elgi Rubber

Average diversification

The 3 months correlation between State and Elgi is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding The State Trading and Elgi Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elgi Rubber and State Trading 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 The State Trading are associated (or correlated) with Elgi Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elgi Rubber has no effect on the direction of State Trading i.e., State Trading and Elgi Rubber go up and down completely randomly.

Pair Corralation between State Trading and Elgi Rubber

Assuming the 90 days trading horizon State Trading is expected to generate 1.57 times less return on investment than Elgi Rubber. In addition to that, State Trading is 1.01 times more volatile than Elgi Rubber. It trades about 0.06 of its total potential returns per unit of risk. Elgi Rubber is currently generating about 0.1 per unit of volatility. If you would invest  4,155  in Elgi Rubber on October 3, 2024 and sell it today you would earn a total of  9,450  from holding Elgi Rubber or generate 227.44% return on investment over 90 days.

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

The State Trading  vs.  Elgi Rubber

State Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, State Trading is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Elgi Rubber

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elgi Rubber are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental drivers, Elgi Rubber sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with State Trading and Elgi Rubber

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

The idea behind The State Trading and Elgi Rubber 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.