Correlation Between Elcom Technology and Hai An
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Hai An 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 Hai An 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 Hai An Transport, you can compare the effects of market volatilities on Elcom Technology and Hai An 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 Hai An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Hai An.
Diversification Opportunities for Elcom Technology and Hai An
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elcom and Hai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Hai An Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hai An Transport 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 Hai An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hai An Transport has no effect on the direction of Elcom Technology i.e., Elcom Technology and Hai An go up and down completely randomly.
Pair Corralation between Elcom Technology and Hai An
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 1.36 times more return on investment than Hai An. However, Elcom Technology is 1.36 times more volatile than Hai An Transport. It trades about 0.1 of its potential returns per unit of risk. Hai An Transport is currently generating about 0.05 per unit of risk. If you would invest 2,695,000 in Elcom Technology Communications on October 30, 2024 and sell it today you would earn a total of 90,000 from holding Elcom Technology Communications or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elcom Technology Communication vs. Hai An Transport
Performance |
| Timeline |
| Elcom Technology Com |
| Hai An Transport |
Elcom Technology and Hai An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and Hai An
The main advantage of trading using opposite Elcom Technology and Hai An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, Hai An 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 Hai An will offset losses from the drop in Hai An'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 |
| Hai An vs. PVI Reinsurance Corp | Hai An vs. HUD1 Investment and | Hai An vs. Vien Dong Investment | Hai An vs. Military Insurance Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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