Correlation Between Eros International and Blue Coast

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

By analyzing existing cross correlation between Eros International Media and Blue Coast Hotels, you can compare the effects of market volatilities on Eros International and Blue Coast 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 Eros International with a short position of Blue Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros International and Blue Coast.

Diversification Opportunities for Eros International and Blue Coast

0.38

Correlation Coefficient

Eros International  Blue Coast

Weak diversification

The 3 months correlation between Eros and Blue is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Eros International Media and Blue Coast Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Coast Hotels and Eros International 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 Eros International Media are associated (or correlated) with Blue Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Coast Hotels has no effect on the direction of Eros International i.e., Eros International and Blue Coast go up and down completely randomly.

Pair Corralation between Eros International and Blue Coast

Assuming the 90 days trading horizon Eros International Media is expected to generate 0.77 times more return on investment than Blue Coast. However, Eros International Media is 1.3 times less risky than Blue Coast. It trades about 0.19 of its potential returns per unit of risk. Blue Coast Hotels is currently generating about 0.02 per unit of risk. If you would invest  631.00  in Eros International Media on April 20, 2025 and sell it today you would earn a total of  150.00  from holding Eros International Media or generate 23.77% return on investment over 90 days.

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

Eros International Media  vs.  Blue Coast Hotels

Eros International Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eros International Media are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Eros International exhibited solid returns over the last few months and may actually be approaching a breakup point.

Blue Coast Hotels

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Coast Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Blue Coast is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eros International and Blue Coast

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

The idea behind Eros International Media and Blue Coast Hotels 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.