Correlation Between Embassy Office and Time Technoplast

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

By analyzing existing cross correlation between Embassy Office Parks and Time Technoplast Limited, you can compare the effects of market volatilities on Embassy Office and Time Technoplast 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 Embassy Office with a short position of Time Technoplast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embassy Office and Time Technoplast.

Diversification Opportunities for Embassy Office and Time Technoplast

0.76

Correlation Coefficient

Embassy Office  Time Technoplast

Poor diversification

The 3 months correlation between Embassy and Time is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Embassy Office Parks and Time Technoplast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Time Technoplast and Embassy Office 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 Embassy Office Parks are associated (or correlated) with Time Technoplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Time Technoplast has no effect on the direction of Embassy Office i.e., Embassy Office and Time Technoplast go up and down completely randomly.

Pair Corralation between Embassy Office and Time Technoplast

Assuming the 90 days trading horizon Embassy Office is expected to generate 4.99 times less return on investment than Time Technoplast. But when comparing it to its historical volatility, Embassy Office Parks is 2.2 times less risky than Time Technoplast. It trades about 0.04 of its potential returns per unit of risk. Time Technoplast Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13,575  in Time Technoplast Limited on April 24, 2025 and sell it today you would earn a total of  33,805  from holding Time Technoplast Limited or generate 249.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.38%
Values	Daily Returns

Embassy Office Parks  vs.  Time Technoplast Limited

Embassy Office Parks

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embassy Office Parks are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Embassy Office is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Time Technoplast

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Time Technoplast Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, Time Technoplast exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embassy Office and Time Technoplast

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

The idea behind Embassy Office Parks and Time Technoplast 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.