Correlation Between Elcom Technology and Construction
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Construction 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 Construction 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 Construction And Investment, you can compare the effects of market volatilities on Elcom Technology and Construction 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 Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Construction.
Diversification Opportunities for Elcom Technology and Construction
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elcom and Construction is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Construction And Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction And Inv 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 Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction And Inv has no effect on the direction of Elcom Technology i.e., Elcom Technology and Construction go up and down completely randomly.
Pair Corralation between Elcom Technology and Construction
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 1.02 times more return on investment than Construction. However, Elcom Technology is 1.02 times more volatile than Construction And Investment. It trades about 0.15 of its potential returns per unit of risk. Construction And Investment is currently generating about 0.01 per unit of risk. If you would invest 2,500,000 in Elcom Technology Communications on September 1, 2024 and sell it today you would earn a total of 120,000 from holding Elcom Technology Communications or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elcom Technology Communication vs. Construction And Investment
Performance |
| Timeline |
| Elcom Technology Com |
| Construction And Inv |
Elcom Technology and Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and Construction
The main advantage of trading using opposite Elcom Technology and Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, Construction 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 Construction will offset losses from the drop in Construction's long position.| Elcom Technology vs. Pha Lai Thermal | Elcom Technology vs. Hochiminh City Metal | Elcom Technology vs. Vietnam Petroleum Transport | Elcom Technology vs. Transport and Industry |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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