Correlation Between Construction and Elcom Technology
Can any of the company-specific risk be diversified away by investing in both Construction 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 Construction and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction And Investment and Elcom Technology Communications, you can compare the effects of market volatilities on Construction 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 Construction with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction and Elcom Technology.
Diversification Opportunities for Construction and Elcom Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Construction and Elcom is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Construction And Investment 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 Construction 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 Construction And Investment 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 Construction i.e., Construction and Elcom Technology go up and down completely randomly.
Pair Corralation between Construction and Elcom Technology
Assuming the 90 days trading horizon Construction is expected to generate 22.19 times less return on investment than Elcom Technology. But when comparing it to its historical volatility, Construction And Investment is 1.02 times less risky than Elcom Technology. It trades about 0.01 of its potential returns per unit of risk. Elcom Technology Communications is currently generating about 0.15 of returns per unit of risk over similar time horizon. 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 |
Construction And Investment vs. Elcom Technology Communication
Performance |
| Timeline |
| Construction And Inv |
| Elcom Technology Com |
Construction and Elcom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction and Elcom Technology
The main advantage of trading using opposite Construction and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction 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.| Construction vs. FIT INVEST JSC | Construction vs. Damsan JSC | Construction vs. An Phat Plastic | Construction vs. Alphanam ME |
| Elcom Technology vs. Pha Lai Thermal | Elcom Technology vs. Hochiminh City Metal | Elcom Technology vs. Vietnam Petroleum Transport | Elcom Technology vs. Transport and Industry |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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