Correlation Between Network18 Media and Bombay Burmah

Can any of the company-specific risk be diversified away by investing in both Network18 Media and Bombay Burmah 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 Network18 Media and Bombay Burmah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Network18 Media Investments and Bombay Burmah Trading, you can compare the effects of market volatilities on Network18 Media and Bombay Burmah 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 Network18 Media with a short position of Bombay Burmah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Network18 Media and Bombay Burmah.

Diversification Opportunities for Network18 Media and Bombay Burmah

0.64

Correlation Coefficient

Network18 Media  Bombay Burmah

Poor diversification

The 3 months correlation between Network18 and Bombay is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Network18 Media Investments and Bombay Burmah Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombay Burmah Trading and Network18 Media 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 Network18 Media Investments are associated (or correlated) with Bombay Burmah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombay Burmah Trading has no effect on the direction of Network18 Media i.e., Network18 Media and Bombay Burmah go up and down completely randomly.

Pair Corralation between Network18 Media and Bombay Burmah

Assuming the 90 days trading horizon Network18 Media Investments is expected to generate 2.01 times more return on investment than Bombay Burmah. However, Network18 Media is 2.01 times more volatile than Bombay Burmah Trading. It trades about 0.15 of its potential returns per unit of risk. Bombay Burmah Trading is currently generating about 0.02 per unit of risk. If you would invest  4,579  in Network18 Media Investments on April 22, 2025 and sell it today you would earn a total of  1,544  from holding Network18 Media Investments or generate 33.72% return on investment over 90 days.

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

Network18 Media Investments  vs.  Bombay Burmah Trading

Network18 Media Inve

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Network18 Media Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward-looking signals, Network18 Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bombay Burmah Trading

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bombay Burmah Trading are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Bombay Burmah is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Network18 Media and Bombay Burmah

The main advantage of trading using opposite Network18 Media and Bombay Burmah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Network18 Media position performs unexpectedly, Bombay Burmah 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 Bombay Burmah will offset losses from the drop in Bombay Burmah's long position.

The idea behind Network18 Media Investments and Bombay Burmah Trading 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.