Correlation Between Envela Corp and HK Electric
Can any of the company-specific risk be diversified away by investing in both Envela Corp and HK Electric 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 Envela Corp and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Envela Corp and HK Electric Investments, you can compare the effects of market volatilities on Envela Corp and HK Electric 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 Envela Corp with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Envela Corp and HK Electric.
Diversification Opportunities for Envela Corp and HK Electric
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Envela and HKT is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Envela Corp and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments and Envela Corp 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 Envela Corp are associated (or correlated) with HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of Envela Corp i.e., Envela Corp and HK Electric go up and down completely randomly.
Pair Corralation between Envela Corp and HK Electric
Assuming the 90 days trading horizon Envela Corp is expected to generate 2.58 times less return on investment than HK Electric. In addition to that, Envela Corp is 1.2 times more volatile than HK Electric Investments. It trades about 0.03 of its total potential returns per unit of risk. HK Electric Investments is currently generating about 0.1 per unit of volatility. If you would invest 17.00 in HK Electric Investments on October 17, 2024 and sell it today you would earn a total of 48.00 from holding HK Electric Investments or generate 282.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.61% |
| Values | Daily Returns |
Envela Corp vs. HK Electric Investments
Performance |
| Timeline |
| Envela Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
| HK Electric Investments |
Envela Corp and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Envela Corp and HK Electric
The main advantage of trading using opposite Envela Corp and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Envela Corp position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| Envela Corp vs. HK Electric Investments | Envela Corp vs. CHRYSALIS INVESTMENTS LTD | Envela Corp vs. CDL INVESTMENT | Envela Corp vs. Scottish Mortgage Investment |
| HK Electric vs. EAGLE MATERIALS | HK Electric vs. BioNTech SE | HK Electric vs. SWISS WATER DECAFFCOFFEE | HK Electric vs. Kingdee International Software |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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