Correlation Between Coffee Day and Network18 Media

Can any of the company-specific risk be diversified away by investing in both Coffee Day and Network18 Media 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 Coffee Day and Network18 Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coffee Day Enterprises and Network18 Media Investments, you can compare the effects of market volatilities on Coffee Day and Network18 Media 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 Coffee Day with a short position of Network18 Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Day and Network18 Media.

Diversification Opportunities for Coffee Day and Network18 Media

0.78

Correlation Coefficient

Coffee Day  Network18 Media

Poor diversification

The 3 months correlation between Coffee and Network18 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Day Enterprises and Network18 Media Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network18 Media Inve and Coffee Day 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 Coffee Day Enterprises are associated (or correlated) with Network18 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network18 Media Inve has no effect on the direction of Coffee Day i.e., Coffee Day and Network18 Media go up and down completely randomly.

Pair Corralation between Coffee Day and Network18 Media

Assuming the 90 days trading horizon Coffee Day Enterprises is expected to generate 1.04 times more return on investment than Network18 Media. However, Coffee Day is 1.04 times more volatile than Network18 Media Investments. It trades about 0.13 of its potential returns per unit of risk. Network18 Media Investments is currently generating about 0.13 per unit of risk. If you would invest  2,962  in Coffee Day Enterprises on April 24, 2025 and sell it today you would earn a total of  830.00  from holding Coffee Day Enterprises or generate 28.02% return on investment over 90 days.

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

Coffee Day Enterprises  vs.  Network18 Media Investments

Coffee Day Enterprises

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coffee Day Enterprises are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Coffee Day exhibited solid returns over the last few months and may actually be approaching a breakup point.

Network18 Media Inve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Network18 Media Investments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward-looking signals, Network18 Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coffee Day and Network18 Media

The main advantage of trading using opposite Coffee Day and Network18 Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Day position performs unexpectedly, Network18 Media 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 Network18 Media will offset losses from the drop in Network18 Media's long position.

The idea behind Coffee Day Enterprises and Network18 Media Investments 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.