Correlation Between El Mor and Baran

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

By analyzing existing cross correlation between El Mor Electric Installation and Baran Group, you can compare the effects of market volatilities on El Mor and Baran 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 El Mor with a short position of Baran. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Mor and Baran.

Diversification Opportunities for El Mor and Baran

0.78

Correlation Coefficient

El Mor  Baran

Poor diversification

The 3 months correlation between ELMR and Baran is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding El Mor Electric Installation and Baran Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baran Group and El Mor 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 El Mor Electric Installation are associated (or correlated) with Baran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baran Group has no effect on the direction of El Mor i.e., El Mor and Baran go up and down completely randomly.

Pair Corralation between El Mor and Baran

Assuming the 90 days trading horizon El Mor Electric Installation is expected to generate 0.92 times more return on investment than Baran. However, El Mor Electric Installation is 1.09 times less risky than Baran. It trades about 0.37 of its potential returns per unit of risk. Baran Group is currently generating about 0.09 per unit of risk. If you would invest  120,100  in El Mor Electric Installation on September 28, 2024 and sell it today you would earn a total of  23,900  from holding El Mor Electric Installation or generate 19.9% return on investment over 90 days.

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

El Mor Electric Installation  vs.  Baran Group

El Mor Electric

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in El Mor Electric Installation are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, El Mor sustained solid returns over the last few months and may actually be approaching a breakup point.

Baran Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baran Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Baran sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with El Mor and Baran

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

The idea behind El Mor Electric Installation and Baran Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.