Correlation Between CHINA STATE and Envela Corp
Can any of the company-specific risk be diversified away by investing in both CHINA STATE and Envela Corp 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 CHINA STATE and Envela Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA STATE STRU and Envela Corp, you can compare the effects of market volatilities on CHINA STATE and Envela Corp 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 CHINA STATE with a short position of Envela Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA STATE and Envela Corp.
Diversification Opportunities for CHINA STATE and Envela Corp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Envela is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CHINA STATE STRU and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp and CHINA STATE 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 CHINA STATE STRU are associated (or correlated) with Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of CHINA STATE i.e., CHINA STATE and Envela Corp go up and down completely randomly.
Pair Corralation between CHINA STATE and Envela Corp
Assuming the 90 days trading horizon CHINA STATE is expected to generate 1.32 times less return on investment than Envela Corp. In addition to that, CHINA STATE is 1.36 times more volatile than Envela Corp. It trades about 0.1 of its total potential returns per unit of risk. Envela Corp is currently generating about 0.18 per unit of volatility. If you would invest 398.00 in Envela Corp on September 29, 2024 and sell it today you would earn a total of 272.00 from holding Envela Corp or generate 68.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.28% |
| Values | Daily Returns |
CHINA STATE STRU vs. Envela Corp
Performance |
| Timeline |
| CHINA STATE STRU |
| Envela Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
CHINA STATE and Envela Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA STATE and Envela Corp
The main advantage of trading using opposite CHINA STATE and Envela Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA STATE position performs unexpectedly, Envela Corp 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 Envela Corp will offset losses from the drop in Envela Corp's long position.The idea behind CHINA STATE STRU and Envela Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |