Correlation Between Elcom International and Alger Ai

Can any of the company-specific risk be diversified away by investing in both Elcom International and Alger Ai 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 Elcom International and Alger Ai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elcom International and Alger Ai Enablers, you can compare the effects of market volatilities on Elcom International and Alger Ai 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 Elcom International with a short position of Alger Ai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom International and Alger Ai.

Diversification Opportunities for Elcom International and Alger Ai

-0.47

Correlation Coefficient

Elcom International  Alger Ai

Very good diversification

The 3 months correlation between Elcom and Alger is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Elcom International and Alger Ai Enablers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Ai Enablers and Elcom International 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 Elcom International are associated (or correlated) with Alger Ai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Ai Enablers has no effect on the direction of Elcom International i.e., Elcom International and Alger Ai go up and down completely randomly.

Pair Corralation between Elcom International and Alger Ai

If you would invest  1,066  in Alger Ai Enablers on August 31, 2024 and sell it today you would earn a total of  245.00  from holding Alger Ai Enablers or generate 22.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Elcom International  vs.  Alger Ai Enablers

Elcom International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elcom International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Elcom International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Alger Ai Enablers

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alger Ai Enablers are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Alger Ai showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elcom International and Alger Ai

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

The idea behind Elcom International and Alger Ai Enablers 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.