Correlation Between ITI and Zee Entertainment

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

By analyzing existing cross correlation between ITI Limited and Zee Entertainment Enterprises, you can compare the effects of market volatilities on ITI and Zee 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 ITI with a short position of Zee Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITI and Zee Entertainment.

Diversification Opportunities for ITI and Zee Entertainment

0.36

Correlation Coefficient

ITI  Zee Entertainment

Weak diversification

The 3 months correlation between ITI and Zee is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ITI Limited and Zee Entertainment Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zee Entertainment and ITI 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 ITI Limited are associated (or correlated) with Zee Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zee Entertainment has no effect on the direction of ITI i.e., ITI and Zee Entertainment go up and down completely randomly.

Pair Corralation between ITI and Zee Entertainment

Assuming the 90 days trading horizon ITI Limited is expected to generate 2.47 times more return on investment than Zee Entertainment. However, ITI is 2.47 times more volatile than Zee Entertainment Enterprises. It trades about 0.22 of its potential returns per unit of risk. Zee Entertainment Enterprises is currently generating about 0.13 per unit of risk. If you would invest  22,788  in ITI Limited on September 2, 2024 and sell it today you would earn a total of  5,875  from holding ITI Limited or generate 25.78% return on investment over 90 days.

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

ITI Limited  vs.  Zee Entertainment Enterprises

ITI Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ITI Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ITI is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Zee Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zee Entertainment Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ITI and Zee Entertainment

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

The idea behind ITI Limited and Zee Entertainment Enterprises 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.