Correlation Between Evolving Systems and Great Elm

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

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

Diversification Opportunities for Evolving Systems and Great Elm

-0.86

Correlation Coefficient

Evolving Systems  Great Elm

Pay attention - limited upside

The 3 months correlation between Evolving and Great is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Evolving Systems and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital and Evolving Systems 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 Evolving Systems are associated (or correlated) with Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of Evolving Systems i.e., Evolving Systems and Great Elm go up and down completely randomly.

Pair Corralation between Evolving Systems and Great Elm

If you would invest  2,550  in Great Elm Capital on September 4, 2024 and sell it today you would earn a total of  4.00  from holding Great Elm Capital or generate 0.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	5.56%
Values	Daily Returns

Evolving Systems  vs.  Great Elm Capital

Evolving Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolving Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Evolving Systems is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Great Elm Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Great Elm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evolving Systems and Great Elm

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

The idea behind Evolving Systems and Great Elm Capital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.