Correlation Between Bharat Road and EPL

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

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

Diversification Opportunities for Bharat Road and EPL

-0.6

Correlation Coefficient

Bharat Road  EPL

Excellent diversification

The 3 months correlation between Bharat and EPL is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bharat Road Network and EPL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPL Limited and Bharat Road 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 Bharat Road Network are associated (or correlated) with EPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPL Limited has no effect on the direction of Bharat Road i.e., Bharat Road and EPL go up and down completely randomly.

Pair Corralation between Bharat Road and EPL

Assuming the 90 days trading horizon Bharat Road Network is expected to under-perform the EPL. In addition to that, Bharat Road is 1.15 times more volatile than EPL Limited. It trades about -0.13 of its total potential returns per unit of risk. EPL Limited is currently generating about 0.15 per unit of volatility. If you would invest  19,365  in EPL Limited on April 25, 2025 and sell it today you would earn a total of  3,878  from holding EPL Limited or generate 20.03% return on investment over 90 days.

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

Bharat Road Network  vs.  EPL Limited

Bharat Road Network

Risk-Adjusted Performance

Very Weak

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

EPL Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EPL Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, EPL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bharat Road and EPL

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

The idea behind Bharat Road Network and EPL 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.