Correlation Between Elcom Technology and Plastic Additives
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Plastic Additives 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 Plastic Additives 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 Plastic Additives JSC, you can compare the effects of market volatilities on Elcom Technology and Plastic Additives 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 Plastic Additives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Plastic Additives.
Diversification Opportunities for Elcom Technology and Plastic Additives
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Elcom and Plastic is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Plastic Additives JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Additives JSC 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 Plastic Additives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Additives JSC has no effect on the direction of Elcom Technology i.e., Elcom Technology and Plastic Additives go up and down completely randomly.
Pair Corralation between Elcom Technology and Plastic Additives
Assuming the 90 days trading horizon Elcom Technology is expected to generate 5.79 times less return on investment than Plastic Additives. But when comparing it to its historical volatility, Elcom Technology Communications is 1.44 times less risky than Plastic Additives. It trades about 0.01 of its potential returns per unit of risk. Plastic Additives JSC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 740,000 in Plastic Additives JSC on August 29, 2024 and sell it today you would earn a total of 270,000 from holding Plastic Additives JSC or generate 36.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.51% |
| Values | Daily Returns |
Elcom Technology Communication vs. Plastic Additives JSC
Performance |
| Timeline |
| Elcom Technology Com |
| Plastic Additives JSC |
Elcom Technology and Plastic Additives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and Plastic Additives
The main advantage of trading using opposite Elcom Technology and Plastic Additives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, Plastic Additives 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 Plastic Additives will offset losses from the drop in Plastic Additives' 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 |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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