Correlation Between Elcom Technology and DOMESCO Medical
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and DOMESCO Medical 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 Elcom Technology and DOMESCO Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elcom Technology Communications and DOMESCO Medical Import, you can compare the effects of market volatilities on Elcom Technology and DOMESCO Medical 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 Elcom Technology with a short position of DOMESCO Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and DOMESCO Medical.
Diversification Opportunities for Elcom Technology and DOMESCO Medical
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elcom and DOMESCO is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and DOMESCO Medical Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOMESCO Medical Import and Elcom 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 Elcom Technology Communications are associated (or correlated) with DOMESCO Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOMESCO Medical Import has no effect on the direction of Elcom Technology i.e., Elcom Technology and DOMESCO Medical go up and down completely randomly.
Pair Corralation between Elcom Technology and DOMESCO Medical
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 1.56 times more return on investment than DOMESCO Medical. However, Elcom Technology is 1.56 times more volatile than DOMESCO Medical Import. It trades about 0.07 of its potential returns per unit of risk. DOMESCO Medical Import is currently generating about 0.02 per unit of risk. If you would invest 1,490,000 in Elcom Technology Communications on September 12, 2024 and sell it today you would earn a total of 1,170,000 from holding Elcom Technology Communications or generate 78.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 87.71% |
| Values | Daily Returns |
Elcom Technology Communication vs. DOMESCO Medical Import
Performance |
| Timeline |
| Elcom Technology Com |
| DOMESCO Medical Import |
Elcom Technology and DOMESCO Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and DOMESCO Medical
The main advantage of trading using opposite Elcom Technology and DOMESCO Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, DOMESCO Medical 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 DOMESCO Medical will offset losses from the drop in DOMESCO Medical's long position.| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. Alphanam ME |
| DOMESCO Medical vs. FIT INVEST JSC | DOMESCO Medical vs. Damsan JSC | DOMESCO Medical vs. An Phat Plastic | DOMESCO Medical vs. Alphanam ME |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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