Correlation Between Hurco Companies and Electrovaya Common

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

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

Diversification Opportunities for Hurco Companies and Electrovaya Common

0.49

Correlation Coefficient

Hurco Companies  Electrovaya Common

Very weak diversification

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

Pair Corralation between Hurco Companies and Electrovaya Common

Given the investment horizon of 90 days Hurco Companies is expected to generate 4.84 times less return on investment than Electrovaya Common. But when comparing it to its historical volatility, Hurco Companies is 1.27 times less risky than Electrovaya Common. It trades about 0.02 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  225.00  in Electrovaya Common Shares on September 13, 2024 and sell it today you would earn a total of  33.00  from holding Electrovaya Common Shares or generate 14.67% return on investment over 90 days.

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

Hurco Companies  vs.  Electrovaya Common Shares

Hurco Companies

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hurco Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hurco Companies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Electrovaya Common Shares

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hurco Companies and Electrovaya Common

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

The idea behind Hurco Companies and Electrovaya Common Shares 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.