Correlation Between Elin Electronics and Shemaroo Entertainment

Can any of the company-specific risk be diversified away by investing in both Elin Electronics and Shemaroo Entertainment 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 Shemaroo Entertainment 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 Shemaroo Entertainment Limited, you can compare the effects of market volatilities on Elin Electronics and Shemaroo Entertainment 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 Shemaroo Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elin Electronics and Shemaroo Entertainment.

Diversification Opportunities for Elin Electronics and Shemaroo Entertainment

0.72

Correlation Coefficient

Elin Electronics  Shemaroo Entertainment

Poor diversification

The 3 months correlation between Elin and Shemaroo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Elin Electronics Limited and Shemaroo Entertainment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shemaroo Entertainment 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 Shemaroo Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shemaroo Entertainment has no effect on the direction of Elin Electronics i.e., Elin Electronics and Shemaroo Entertainment go up and down completely randomly.

Pair Corralation between Elin Electronics and Shemaroo Entertainment

Assuming the 90 days trading horizon Elin Electronics Limited is expected to under-perform the Shemaroo Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Elin Electronics Limited is 1.3 times less risky than Shemaroo Entertainment. The stock trades about -0.02 of its potential returns per unit of risk. The Shemaroo Entertainment Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16,134  in Shemaroo Entertainment Limited on September 2, 2024 and sell it today you would earn a total of  600.00  from holding Shemaroo Entertainment Limited or generate 3.72% 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.  Shemaroo Entertainment Limited

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 comparatively stable basic indicators, Elin Electronics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Shemaroo Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shemaroo Entertainment Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Shemaroo Entertainment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Elin Electronics and Shemaroo Entertainment

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

The idea behind Elin Electronics Limited and Shemaroo Entertainment Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.