Correlation Between Elgi Rubber and V Mart

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

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

Diversification Opportunities for Elgi Rubber and V Mart

-0.3

Correlation Coefficient

Elgi Rubber  V Mart

Very good diversification

The 3 months correlation between Elgi and VMART is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Elgi Rubber 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 Elgi Rubber 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 Elgi Rubber 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 Elgi Rubber i.e., Elgi Rubber and V Mart go up and down completely randomly.

Pair Corralation between Elgi Rubber and V Mart

Assuming the 90 days trading horizon Elgi Rubber is expected to under-perform the V Mart. In addition to that, Elgi Rubber is 1.26 times more volatile than V Mart Retail Limited. It trades about -0.02 of its total potential returns per unit of risk. V Mart Retail Limited is currently generating about -0.03 per unit of volatility. If you would invest  79,900  in V Mart Retail Limited on April 25, 2025 and sell it today you would lose (3,525) from holding V Mart Retail Limited or give up 4.41% of portfolio value over 90 days.

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

Elgi Rubber  vs.  V Mart Retail Limited

Elgi Rubber

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elgi Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Elgi Rubber is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

V Mart Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days V Mart Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Elgi Rubber and V Mart

The main advantage of trading using opposite Elgi Rubber and V Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elgi Rubber 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 Elgi Rubber 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .