Correlation Between HT Media and V Mart

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

By analyzing existing cross correlation between HT Media Limited and V Mart Retail Limited, you can compare the effects of market volatilities on HT Media and V Mart 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 HT Media with a short position of V Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of HT Media and V Mart.

Diversification Opportunities for HT Media and V Mart

0.56

Correlation Coefficient

HT Media  V Mart

Very weak diversification

The 3 months correlation between HTMEDIA and VMART is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding HT Media Limited and V Mart Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on V Mart Retail and HT 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 HT Media Limited are associated (or correlated) with V Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of V Mart Retail has no effect on the direction of HT Media i.e., HT Media and V Mart go up and down completely randomly.

Pair Corralation between HT Media and V Mart

Assuming the 90 days trading horizon HT Media is expected to generate 1.53 times less return on investment than V Mart. But when comparing it to its historical volatility, HT Media Limited is 1.14 times less risky than V Mart. It trades about 0.02 of its potential returns per unit of risk. V Mart Retail Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  368,015  in V Mart Retail Limited on September 19, 2024 and sell it today you would earn a total of  8,000  from holding V Mart Retail Limited or generate 2.17% return on investment over 90 days.

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

HT Media Limited  vs.  V Mart Retail Limited

HT Media Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HT Media Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, HT Media is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

V Mart Retail

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in V Mart Retail Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, V Mart is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HT Media and V Mart

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

The idea behind HT Media Limited and V Mart Retail 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.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..