Correlation Between Elcora Advanced and Evergold Corp

Can any of the company-specific risk be diversified away by investing in both Elcora Advanced and Evergold Corp 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 Elcora Advanced and Evergold Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elcora Advanced Materials and Evergold Corp, you can compare the effects of market volatilities on Elcora Advanced and Evergold Corp 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 Elcora Advanced with a short position of Evergold Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcora Advanced and Evergold Corp.

Diversification Opportunities for Elcora Advanced and Evergold Corp

-0.06

Correlation Coefficient

Elcora Advanced  Evergold Corp

Good diversification

The 3 months correlation between Elcora and Evergold is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Elcora Advanced Materials and Evergold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergold Corp and Elcora Advanced 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 Elcora Advanced Materials are associated (or correlated) with Evergold Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergold Corp has no effect on the direction of Elcora Advanced i.e., Elcora Advanced and Evergold Corp go up and down completely randomly.

Pair Corralation between Elcora Advanced and Evergold Corp

Assuming the 90 days horizon Elcora Advanced Materials is expected to generate 0.72 times more return on investment than Evergold Corp. However, Elcora Advanced Materials is 1.4 times less risky than Evergold Corp. It trades about 0.06 of its potential returns per unit of risk. Evergold Corp is currently generating about 0.0 per unit of risk. If you would invest  1.43  in Elcora Advanced Materials on September 5, 2024 and sell it today you would earn a total of  0.07  from holding Elcora Advanced Materials or generate 4.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Elcora Advanced Materials  vs.  Evergold Corp

Elcora Advanced Materials

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elcora Advanced Materials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Elcora Advanced reported solid returns over the last few months and may actually be approaching a breakup point.

Evergold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evergold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evergold Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Elcora Advanced and Evergold Corp

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

The idea behind Elcora Advanced Materials and Evergold Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.