Correlation Between Electro Sensors and Covista Communications

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

By analyzing existing cross correlation between Electro Sensors and Covista Communications, you can compare the effects of market volatilities on Electro Sensors and Covista Communications 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 Electro Sensors with a short position of Covista Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electro Sensors and Covista Communications.

Diversification Opportunities for Electro Sensors and Covista Communications

-0.49

Correlation Coefficient

Electro Sensors  Covista Communications

Very good diversification

The 3 months correlation between Electro and Covista is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Electro Sensors and Covista Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Covista Communications and Electro Sensors 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 Electro Sensors are associated (or correlated) with Covista Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Covista Communications has no effect on the direction of Electro Sensors i.e., Electro Sensors and Covista Communications go up and down completely randomly.

Pair Corralation between Electro Sensors and Covista Communications

If you would invest  379.00  in Electro Sensors on September 3, 2024 and sell it today you would earn a total of  52.00  from holding Electro Sensors or generate 13.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.69%
Values	Daily Returns

Electro Sensors  vs.  Covista Communications

Electro Sensors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electro Sensors are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Electro Sensors exhibited solid returns over the last few months and may actually be approaching a breakup point.

Covista Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covista Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Covista Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Electro Sensors and Covista Communications

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

The idea behind Electro Sensors and Covista Communications 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.