Correlation Between Eros International and Vardhman Special

Can any of the company-specific risk be diversified away by investing in both Eros International and Vardhman Special 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 Vardhman Special 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 Vardhman Special Steels, you can compare the effects of market volatilities on Eros International and Vardhman Special 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 Vardhman Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros International and Vardhman Special.

Diversification Opportunities for Eros International and Vardhman Special

0.14

Correlation Coefficient

Eros International  Vardhman Special

Average diversification

The 3 months correlation between Eros and Vardhman is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eros International Media and Vardhman Special Steels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vardhman Special Steels 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 Vardhman Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vardhman Special Steels has no effect on the direction of Eros International i.e., Eros International and Vardhman Special go up and down completely randomly.

Pair Corralation between Eros International and Vardhman Special

Assuming the 90 days trading horizon Eros International is expected to generate 1.23 times less return on investment than Vardhman Special. But when comparing it to its historical volatility, Eros International Media is 2.0 times less risky than Vardhman Special. It trades about 0.19 of its potential returns per unit of risk. Vardhman Special Steels is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  20,326  in Vardhman Special Steels on April 20, 2025 and sell it today you would earn a total of  5,379  from holding Vardhman Special Steels or generate 26.46% return on investment over 90 days.

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

Eros International Media  vs.  Vardhman Special Steels

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.

Vardhman Special Steels

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vardhman Special Steels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vardhman Special unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eros International and Vardhman Special

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

The idea behind Eros International Media and Vardhman Special Steels 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.