Correlation Between Electronic Sensor and Mesa Laboratories

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

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

Diversification Opportunities for Electronic Sensor and Mesa Laboratories

0.0

Correlation Coefficient

Electronic Sensor  Mesa Laboratories

Pay attention - limited upside

The 3 months correlation between Electronic and Mesa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Sensor Technology and Mesa Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Laboratories and Electronic Sensor 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 Electronic Sensor Technology are associated (or correlated) with Mesa Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Laboratories has no effect on the direction of Electronic Sensor i.e., Electronic Sensor and Mesa Laboratories go up and down completely randomly.

Pair Corralation between Electronic Sensor and Mesa Laboratories

If you would invest  12,838  in Mesa Laboratories on September 13, 2024 and sell it today you would earn a total of  40.00  from holding Mesa Laboratories or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Electronic Sensor Technology  vs.  Mesa Laboratories

Electronic Sensor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Sensor Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Electronic Sensor is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Mesa Laboratories

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Laboratories are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Laboratories may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Electronic Sensor and Mesa Laboratories

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

The idea behind Electronic Sensor Technology and Mesa Laboratories 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.