Correlation Between Voltronic Power and Celxpert Energy

Can any of the company-specific risk be diversified away by investing in both Voltronic Power and Celxpert Energy 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 Voltronic Power and Celxpert Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Voltronic Power and Celxpert Energy

-0.69

Correlation Coefficient

Voltronic Power  Celxpert Energy

Excellent diversification

The 3 months correlation between Voltronic and Celxpert is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Voltronic Power Technology and Celxpert Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celxpert Energy and Voltronic Power 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 Voltronic Power Technology are associated (or correlated) with Celxpert Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celxpert Energy has no effect on the direction of Voltronic Power i.e., Voltronic Power and Celxpert Energy go up and down completely randomly.

Pair Corralation between Voltronic Power and Celxpert Energy

Assuming the 90 days trading horizon Voltronic Power is expected to generate 39.05 times less return on investment than Celxpert Energy. But when comparing it to its historical volatility, Voltronic Power Technology is 2.52 times less risky than Celxpert Energy. It trades about 0.02 of its potential returns per unit of risk. Celxpert Energy is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  2,530  in Celxpert Energy on September 12, 2024 and sell it today you would earn a total of  1,070  from holding Celxpert Energy or generate 42.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Voltronic Power Technology  vs.  Celxpert Energy

Voltronic Power Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltronic Power Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Voltronic Power is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Celxpert Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celxpert Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Celxpert Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Voltronic Power and Celxpert Energy

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

The idea behind Voltronic Power Technology and Celxpert Energy 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.