Correlation Between E L and Vitalhub Corp

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

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

Diversification Opportunities for E L and Vitalhub Corp

0.75

Correlation Coefficient

E L  Vitalhub Corp

Poor diversification

The 3 months correlation between ELF and Vitalhub is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Vitalhub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitalhub Corp and E L 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 E L Financial Corp are associated (or correlated) with Vitalhub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitalhub Corp has no effect on the direction of E L i.e., E L and Vitalhub Corp go up and down completely randomly.

Pair Corralation between E L and Vitalhub Corp

Assuming the 90 days trading horizon E L is expected to generate 5.08 times less return on investment than Vitalhub Corp. But when comparing it to its historical volatility, E L Financial Corp is 1.63 times less risky than Vitalhub Corp. It trades about 0.05 of its potential returns per unit of risk. Vitalhub Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Vitalhub Corp on September 21, 2024 and sell it today you would earn a total of  225.00  from holding Vitalhub Corp or generate 26.01% return on investment over 90 days.

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

E L Financial Corp  vs.  Vitalhub Corp

E L Financial

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, E L is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vitalhub Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vitalhub Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Vitalhub Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with E L and Vitalhub Corp

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

The idea behind E L Financial Corp and Vitalhub 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.