Correlation Between Electra and Electreon Wireless

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

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

Diversification Opportunities for Electra and Electreon Wireless

0.11

Correlation Coefficient

Electra  Electreon Wireless

Average diversification

The 3 months correlation between Electra and Electreon is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Electra and Electreon Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electreon Wireless and Electra 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 Electra are associated (or correlated) with Electreon Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electreon Wireless has no effect on the direction of Electra i.e., Electra and Electreon Wireless go up and down completely randomly.

Pair Corralation between Electra and Electreon Wireless

Assuming the 90 days trading horizon Electra is expected to generate 0.54 times more return on investment than Electreon Wireless. However, Electra is 1.86 times less risky than Electreon Wireless. It trades about 0.34 of its potential returns per unit of risk. Electreon Wireless is currently generating about -0.01 per unit of risk. If you would invest  14,850,000  in Electra on September 27, 2024 and sell it today you would earn a total of  6,006,000  from holding Electra or generate 40.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.83%
Values	Daily Returns

Electra  vs.  Electreon Wireless

Electra

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Electra are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Electra sustained solid returns over the last few months and may actually be approaching a breakup point.

Electreon Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electreon Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electreon Wireless is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electra and Electreon Wireless

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

The idea behind Electra and Electreon Wireless 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.