Correlation Between Innovative Technology and Elcom Technology
Can any of the company-specific risk be diversified away by investing in both Innovative Technology and Elcom Technology 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 Innovative Technology and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Technology Development and Elcom Technology Communications, you can compare the effects of market volatilities on Innovative Technology and Elcom Technology 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 Innovative Technology with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Technology and Elcom Technology.
Diversification Opportunities for Innovative Technology and Elcom Technology
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovative and Elcom is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Technology Developm and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and Innovative 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 Innovative Technology Development are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Innovative Technology i.e., Innovative Technology and Elcom Technology go up and down completely randomly.
Pair Corralation between Innovative Technology and Elcom Technology
Assuming the 90 days trading horizon Innovative Technology Development is expected to under-perform the Elcom Technology. In addition to that, Innovative Technology is 1.6 times more volatile than Elcom Technology Communications. It trades about -0.13 of its total potential returns per unit of risk. Elcom Technology Communications is currently generating about 0.09 per unit of volatility. If you would invest 2,495,000 in Elcom Technology Communications on August 31, 2024 and sell it today you would earn a total of 65,000 from holding Elcom Technology Communications or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Technology Developm vs. Elcom Technology Communication
Performance |
| Timeline |
| Innovative Technology |
| Elcom Technology Com |
Innovative Technology and Elcom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Technology and Elcom Technology
The main advantage of trading using opposite Innovative Technology and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Technology position performs unexpectedly, Elcom Technology 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 Elcom Technology will offset losses from the drop in Elcom Technology's long position.| Innovative Technology vs. FIT INVEST JSC | Innovative Technology vs. Damsan JSC | Innovative Technology vs. An Phat Plastic | Innovative Technology vs. Alphanam ME |
| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. Alphanam ME |
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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