Correlation Between Elcom Technology and Tienlen Steel
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Tienlen Steel 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 Tienlen Steel 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 Tienlen Steel Corp, you can compare the effects of market volatilities on Elcom Technology and Tienlen Steel 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 Tienlen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Tienlen Steel.
Diversification Opportunities for Elcom Technology and Tienlen Steel
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Elcom and Tienlen is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Tienlen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tienlen Steel Corp 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 Tienlen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tienlen Steel Corp has no effect on the direction of Elcom Technology i.e., Elcom Technology and Tienlen Steel go up and down completely randomly.
Pair Corralation between Elcom Technology and Tienlen Steel
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 1.26 times more return on investment than Tienlen Steel. However, Elcom Technology is 1.26 times more volatile than Tienlen Steel Corp. It trades about 0.12 of its potential returns per unit of risk. Tienlen Steel Corp is currently generating about -0.34 per unit of risk. If you would invest 2,525,000 in Elcom Technology Communications on September 3, 2024 and sell it today you would earn a total of 95,000 from holding Elcom Technology Communications or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elcom Technology Communication vs. Tienlen Steel Corp
Performance |
| Timeline |
| Elcom Technology Com |
| Tienlen Steel Corp |
Elcom Technology and Tienlen Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elcom Technology and Tienlen Steel
The main advantage of trading using opposite Elcom Technology and Tienlen Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, Tienlen Steel 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 Tienlen Steel will offset losses from the drop in Tienlen Steel's long position.| Elcom Technology vs. Tin Nghia Industrial | Elcom Technology vs. Global Electrical Technology | Elcom Technology vs. Hochiminh City Metal | Elcom Technology vs. Sea Air Freight |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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