Correlation Between Electronics Mart and MIRC Electronics

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

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

Diversification Opportunities for Electronics Mart and MIRC Electronics

0.39

Correlation Coefficient

Electronics Mart  MIRC Electronics

Weak diversification

The 3 months correlation between Electronics and MIRC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Electronics Mart India and MIRC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRC Electronics and Electronics Mart 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 Electronics Mart India are associated (or correlated) with MIRC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRC Electronics has no effect on the direction of Electronics Mart i.e., Electronics Mart and MIRC Electronics go up and down completely randomly.

Pair Corralation between Electronics Mart and MIRC Electronics

Assuming the 90 days trading horizon Electronics Mart India is expected to under-perform the MIRC Electronics. In addition to that, Electronics Mart is 1.04 times more volatile than MIRC Electronics Limited. It trades about -0.04 of its total potential returns per unit of risk. MIRC Electronics Limited is currently generating about 0.08 per unit of volatility. If you would invest  1,612  in MIRC Electronics Limited on April 22, 2025 and sell it today you would earn a total of  217.00  from holding MIRC Electronics Limited or generate 13.46% return on investment over 90 days.

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

Electronics Mart India  vs.  MIRC Electronics Limited

Electronics Mart India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electronics Mart India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

MIRC Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MIRC Electronics Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, MIRC Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electronics Mart and MIRC Electronics

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

The idea behind Electronics Mart India and MIRC Electronics 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.