Correlation Between Elin Electronics and Lotus Eye

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

By analyzing existing cross correlation between Elin Electronics Limited and Lotus Eye Hospital, you can compare the effects of market volatilities on Elin Electronics and Lotus Eye 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 Elin Electronics with a short position of Lotus Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elin Electronics and Lotus Eye.

Diversification Opportunities for Elin Electronics and Lotus Eye

0.67

Correlation Coefficient

Elin Electronics  Lotus Eye

Poor diversification

The 3 months correlation between Elin and Lotus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Elin Electronics Limited and Lotus Eye Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Eye Hospital and Elin Electronics 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 Elin Electronics Limited are associated (or correlated) with Lotus Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Eye Hospital has no effect on the direction of Elin Electronics i.e., Elin Electronics and Lotus Eye go up and down completely randomly.

Pair Corralation between Elin Electronics and Lotus Eye

Assuming the 90 days trading horizon Elin Electronics Limited is expected to generate 0.93 times more return on investment than Lotus Eye. However, Elin Electronics Limited is 1.07 times less risky than Lotus Eye. It trades about 0.13 of its potential returns per unit of risk. Lotus Eye Hospital is currently generating about 0.03 per unit of risk. If you would invest  20,170  in Elin Electronics Limited on September 23, 2024 and sell it today you would earn a total of  1,163  from holding Elin Electronics Limited or generate 5.77% return on investment over 90 days.

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

Elin Electronics Limited  vs.  Lotus Eye Hospital

Elin Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elin Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lotus Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotus Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Elin Electronics and Lotus Eye

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

The idea behind Elin Electronics Limited and Lotus Eye Hospital 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.