Correlation Between Elcom Technology and Pacific Petroleum
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Pacific Petroleum 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 Pacific Petroleum 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 Pacific Petroleum Transportation, you can compare the effects of market volatilities on Elcom Technology and Pacific Petroleum 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 Pacific Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Pacific Petroleum.
Diversification Opportunities for Elcom Technology and Pacific Petroleum
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elcom and Pacific is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Pacific Petroleum Transportati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Petroleum 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 Pacific Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Petroleum has no effect on the direction of Elcom Technology i.e., Elcom Technology and Pacific Petroleum go up and down completely randomly.
Pair Corralation between Elcom Technology and Pacific Petroleum
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 1.27 times more return on investment than Pacific Petroleum. However, Elcom Technology is 1.27 times more volatile than Pacific Petroleum Transportation. It trades about 0.07 of its potential returns per unit of risk. Pacific Petroleum Transportation is currently generating about 0.07 per unit of risk. If you would invest 1,935,000 in Elcom Technology Communications on September 4, 2024 and sell it today you would earn a total of 710,000 from holding Elcom Technology Communications or generate 36.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elcom Technology Communication vs. Pacific Petroleum Transportati
Performance |
| Timeline |
| Elcom Technology Com |
| Pacific Petroleum |
Elcom Technology and Pacific Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and Pacific Petroleum
The main advantage of trading using opposite Elcom Technology and Pacific Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, Pacific Petroleum 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 Pacific Petroleum will offset losses from the drop in Pacific Petroleum'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 |
| Pacific Petroleum vs. Alphanam ME | Pacific Petroleum vs. Hochiminh City Metal | Pacific Petroleum vs. Atesco Industrial Cartering | Pacific Petroleum vs. Danang Education Investment |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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