Correlation Between Billion Electric and Edom Technology

Can any of the company-specific risk be diversified away by investing in both Billion Electric and Edom 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 Billion Electric and Edom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Billion Electric Co and Edom Technology Co, you can compare the effects of market volatilities on Billion Electric and Edom 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 Billion Electric with a short position of Edom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Billion Electric and Edom Technology.

Diversification Opportunities for Billion Electric and Edom Technology

0.1

Correlation Coefficient

Billion Electric  Edom Technology

Average diversification

The 3 months correlation between Billion and Edom is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Billion Electric Co and Edom Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edom Technology and Billion Electric 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 Billion Electric Co are associated (or correlated) with Edom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edom Technology has no effect on the direction of Billion Electric i.e., Billion Electric and Edom Technology go up and down completely randomly.

Pair Corralation between Billion Electric and Edom Technology

Assuming the 90 days trading horizon Billion Electric Co is expected to generate 0.95 times more return on investment than Edom Technology. However, Billion Electric Co is 1.05 times less risky than Edom Technology. It trades about -0.04 of its potential returns per unit of risk. Edom Technology Co is currently generating about -0.15 per unit of risk. If you would invest  3,745  in Billion Electric Co on September 3, 2024 and sell it today you would lose (335.00) from holding Billion Electric Co or give up 8.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Billion Electric Co  vs.  Edom Technology Co

Billion Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Billion Electric Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Edom Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edom Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Billion Electric and Edom Technology

The main advantage of trading using opposite Billion Electric and Edom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Billion Electric position performs unexpectedly, Edom 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 Edom Technology will offset losses from the drop in Edom Technology's long position.

The idea behind Billion Electric Co and Edom Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.