Correlation Between Eros STX and Discovery

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

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

Diversification Opportunities for Eros STX and Discovery

0.0

Correlation Coefficient

Eros STX  Discovery

Pay attention - limited upside

The 3 months correlation between Eros and Discovery is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eros STX Global and Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discovery and Eros STX 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 STX Global are associated (or correlated) with Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discovery has no effect on the direction of Eros STX i.e., Eros STX and Discovery go up and down completely randomly.

Pair Corralation between Eros STX and Discovery

If you would invest (100.00) in Discovery on January 24, 2024 and sell it today you would earn a total of  100.00  from holding Discovery or generate -100.0% return on investment over 90 days.

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

Eros STX Global  vs.  Discovery

Eros STX Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eros STX Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eros STX is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Discovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Discovery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Discovery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eros STX and Discovery

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

The idea behind Eros STX Global and Discovery 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.