Correlation Between Investment and Elcom Technology
Can any of the company-specific risk be diversified away by investing in both Investment and Elcom Technology 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 Investment and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment and Industrial and Elcom Technology Communications, you can compare the effects of market volatilities on Investment and Elcom Technology 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 Investment with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Elcom Technology.
Diversification Opportunities for Investment and Elcom Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investment and Elcom is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and Investment 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 Investment and Industrial are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Investment i.e., Investment and Elcom Technology go up and down completely randomly.
Pair Corralation between Investment and Elcom Technology
Assuming the 90 days trading horizon Investment and Industrial is expected to under-perform the Elcom Technology. But the stock apears to be less risky and, when comparing its historical volatility, Investment and Industrial is 1.62 times less risky than Elcom Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Elcom Technology Communications is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,790,000 in Elcom Technology Communications on October 25, 2024 and sell it today you would lose (20,000) from holding Elcom Technology Communications or give up 0.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment and Industrial vs. Elcom Technology Communication
Performance |
| Timeline |
| Investment and Industrial |
| Elcom Technology Com |
Investment and Elcom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Elcom Technology
The main advantage of trading using opposite Investment and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Elcom Technology 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 Elcom Technology will offset losses from the drop in Elcom Technology's long position.| Investment vs. FIT INVEST JSC | Investment vs. Damsan JSC | Investment vs. An Phat Plastic | Investment vs. APG Securities Joint |
| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. APG Securities Joint |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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