Correlation Between Elcom Technology and Global Electrical
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Global Electrical 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 Global Electrical 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 Global Electrical Technology, you can compare the effects of market volatilities on Elcom Technology and Global Electrical 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 Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Global Electrical.
Diversification Opportunities for Elcom Technology and Global Electrical
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elcom and Global is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical 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 Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Elcom Technology i.e., Elcom Technology and Global Electrical go up and down completely randomly.
Pair Corralation between Elcom Technology and Global Electrical
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 0.24 times more return on investment than Global Electrical. However, Elcom Technology Communications is 4.13 times less risky than Global Electrical. It trades about 0.16 of its potential returns per unit of risk. Global Electrical Technology is currently generating about -0.1 per unit of risk. If you would invest 2,415,000 in Elcom Technology Communications on August 30, 2024 and sell it today you would earn a total of 135,000 from holding Elcom Technology Communications or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 56.52% |
| Values | Daily Returns |
Elcom Technology Communication vs. Global Electrical Technology
Performance |
| Timeline |
| Elcom Technology Com |
| Global Electrical |
Elcom Technology and Global Electrical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and Global Electrical
The main advantage of trading using opposite Elcom Technology and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, Global Electrical 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 Global Electrical will offset losses from the drop in Global Electrical's long position.| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. APG Securities Joint |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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