Correlation Between Neto ME and Elspec
Can any of the company-specific risk be diversified away by investing in both Neto ME and Elspec 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 Neto ME and Elspec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neto ME Holdings and Elspec, you can compare the effects of market volatilities on Neto ME and Elspec 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 Neto ME with a short position of Elspec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neto ME and Elspec.
Diversification Opportunities for Neto ME and Elspec
Almost no diversification
The 3 months correlation between Neto and Elspec is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Neto ME Holdings and Elspec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elspec and Neto ME 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 Neto ME Holdings are associated (or correlated) with Elspec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elspec has no effect on the direction of Neto ME i.e., Neto ME and Elspec go up and down completely randomly.
Pair Corralation between Neto ME and Elspec
Assuming the 90 days trading horizon Neto ME is expected to generate 1.62 times less return on investment than Elspec. But when comparing it to its historical volatility, Neto ME Holdings is 1.49 times less risky than Elspec. It trades about 0.18 of its potential returns per unit of risk. Elspec is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 49,090 in Elspec on September 1, 2024 and sell it today you would earn a total of 28,520 from holding Elspec or generate 58.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neto ME Holdings vs. Elspec
Performance |
| Timeline |
| Neto ME Holdings |
| Elspec |
Neto ME and Elspec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neto ME and Elspec
The main advantage of trading using opposite Neto ME and Elspec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neto ME position performs unexpectedly, Elspec 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 Elspec will offset losses from the drop in Elspec's long position.| Neto ME vs. Delek Automotive Systems | Neto ME vs. Globrands Group | Neto ME vs. Kerur Holdings | Neto ME vs. Ram On Investments and |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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