Correlation Between Elite Material and New Era
Can any of the company-specific risk be diversified away by investing in both Elite Material and New Era 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 Elite Material and New Era into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Material Co and New Era Electronics, you can compare the effects of market volatilities on Elite Material and New Era 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 Elite Material with a short position of New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Material and New Era.
Diversification Opportunities for Elite Material and New Era
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Elite and New is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Elite Material Co and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics and Elite Material 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 Elite Material Co are associated (or correlated) with New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of Elite Material i.e., Elite Material and New Era go up and down completely randomly.
Pair Corralation between Elite Material and New Era
Assuming the 90 days trading horizon Elite Material Co is expected to generate 0.61 times more return on investment than New Era. However, Elite Material Co is 1.63 times less risky than New Era. It trades about 0.33 of its potential returns per unit of risk. New Era Electronics is currently generating about -0.01 per unit of risk. If you would invest 42,700 in Elite Material Co on September 4, 2024 and sell it today you would earn a total of 8,300 from holding Elite Material Co or generate 19.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elite Material Co vs. New Era Electronics
Performance |
| Timeline |
| Elite Material |
| New Era Electronics |
Elite Material and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elite Material and New Era
The main advantage of trading using opposite Elite Material and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Material position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| Elite Material vs. Compeq Manufacturing Co | Elite Material vs. ITEQ Corp | Elite Material vs. Unimicron Technology Corp | Elite Material vs. Chicony Electronics Co |
| New Era vs. Unimicron Technology Corp | New Era vs. Nan Ya Printed | New Era vs. Elite Material Co | New Era vs. Compeq Manufacturing Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |