Correlation Between Electreon Wireless and B Communications

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

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

Diversification Opportunities for Electreon Wireless and B Communications

0.45

Correlation Coefficient

Electreon Wireless  B Communications

Very weak diversification

The 3 months correlation between Electreon and BCOM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Electreon Wireless and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Electreon Wireless 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 Electreon Wireless are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Electreon Wireless i.e., Electreon Wireless and B Communications go up and down completely randomly.

Pair Corralation between Electreon Wireless and B Communications

Assuming the 90 days trading horizon Electreon Wireless is expected to generate 4.66 times less return on investment than B Communications. In addition to that, Electreon Wireless is 1.66 times more volatile than B Communications. It trades about 0.05 of its total potential returns per unit of risk. B Communications is currently generating about 0.39 per unit of volatility. If you would invest  110,200  in B Communications on September 13, 2024 and sell it today you would earn a total of  66,900  from holding B Communications or generate 60.71% return on investment over 90 days.

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

Electreon Wireless  vs.  B Communications

Electreon Wireless

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electreon Wireless are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Electreon Wireless sustained solid returns over the last few months and may actually be approaching a breakup point.

B Communications

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electreon Wireless and B Communications

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

The idea behind Electreon Wireless and B 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.