Correlation Between Converge Technology and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Converge Technology and Electra Battery 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 Converge Technology and Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Converge Technology Solutions and Electra Battery Materials, you can compare the effects of market volatilities on Converge Technology and Electra Battery 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 Converge Technology with a short position of Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Converge Technology and Electra Battery.
Diversification Opportunities for Converge Technology and Electra Battery
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Converge and Electra is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Converge Technology Solutions and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials and Converge Technology 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 Converge Technology Solutions are associated (or correlated) with Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of Converge Technology i.e., Converge Technology and Electra Battery go up and down completely randomly.
Pair Corralation between Converge Technology and Electra Battery
Assuming the 90 days trading horizon Converge Technology Solutions is expected to under-perform the Electra Battery. But the stock apears to be less risky and, when comparing its historical volatility, Converge Technology Solutions is 1.66 times less risky than Electra Battery. The stock trades about -0.08 of its potential returns per unit of risk. The Electra Battery Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Electra Battery Materials on August 24, 2024 and sell it today you would earn a total of 6.00 from holding Electra Battery Materials or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Converge Technology Solutions vs. Electra Battery Materials
Performance |
| Timeline |
| Converge Technology |
| Electra Battery Materials |
Converge Technology and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Converge Technology and Electra Battery
The main advantage of trading using opposite Converge Technology and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Converge Technology position performs unexpectedly, Electra Battery 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 Electra Battery will offset losses from the drop in Electra Battery's long position.| Converge Technology vs. Nickel Creek Platinum | Converge Technology vs. Canlan Ice Sports | Converge Technology vs. Forsys Metals Corp | Converge Technology vs. Electra Battery Materials |
| Electra Battery vs. Fairfax Financial Holdings | Electra Battery vs. US Financial 15 | Electra Battery vs. Aurora Solar Technologies | Electra Battery vs. Solar Alliance Energy |
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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