Correlation Between YH Dimri and Electreon Wireless

Can any of the company-specific risk be diversified away by investing in both YH Dimri and Electreon Wireless 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 YH Dimri and Electreon Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between YH Dimri Construction and Electreon Wireless, you can compare the effects of market volatilities on YH Dimri and Electreon Wireless 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 YH Dimri with a short position of Electreon Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of YH Dimri and Electreon Wireless.

Diversification Opportunities for YH Dimri and Electreon Wireless

0.7

Correlation Coefficient

YH Dimri  Electreon Wireless

Poor diversification

The 3 months correlation between DIMRI and Electreon is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding YH Dimri Construction and Electreon Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electreon Wireless and YH Dimri 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 YH Dimri Construction are associated (or correlated) with Electreon Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electreon Wireless has no effect on the direction of YH Dimri i.e., YH Dimri and Electreon Wireless go up and down completely randomly.

Pair Corralation between YH Dimri and Electreon Wireless

Assuming the 90 days trading horizon YH Dimri is expected to generate 2.85 times less return on investment than Electreon Wireless. But when comparing it to its historical volatility, YH Dimri Construction is 2.81 times less risky than Electreon Wireless. It trades about 0.09 of its potential returns per unit of risk. Electreon Wireless is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,726,000  in Electreon Wireless on September 3, 2024 and sell it today you would earn a total of  250,000  from holding Electreon Wireless or generate 14.48% return on investment over 90 days.

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

YH Dimri Construction  vs.  Electreon Wireless

YH Dimri Construction

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YH Dimri Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, YH Dimri may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Electreon Wireless

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electreon Wireless are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Electreon Wireless sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with YH Dimri and Electreon Wireless

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

The idea behind YH Dimri Construction and Electreon Wireless 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.