Correlation Between Spring Ventures and El Mor

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

By analyzing existing cross correlation between Spring Ventures and El Mor Electric Installation, you can compare the effects of market volatilities on Spring Ventures and El Mor 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 Spring Ventures with a short position of El Mor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Ventures and El Mor.

Diversification Opportunities for Spring Ventures and El Mor

-0.68

Correlation Coefficient

Spring Ventures  El Mor

Excellent diversification

The 3 months correlation between Spring and ELMR is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spring Ventures and El Mor Electric Installation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Mor Electric and Spring Ventures 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 Spring Ventures are associated (or correlated) with El Mor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Mor Electric has no effect on the direction of Spring Ventures i.e., Spring Ventures and El Mor go up and down completely randomly.

Pair Corralation between Spring Ventures and El Mor

Assuming the 90 days trading horizon Spring Ventures is expected to under-perform the El Mor. In addition to that, Spring Ventures is 1.43 times more volatile than El Mor Electric Installation. It trades about -0.15 of its total potential returns per unit of risk. El Mor Electric Installation is currently generating about 0.29 per unit of volatility. If you would invest  103,000  in El Mor Electric Installation on September 29, 2024 and sell it today you would earn a total of  41,000  from holding El Mor Electric Installation or generate 39.81% return on investment over 90 days.

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

Spring Ventures  vs.  El Mor Electric Installation

Spring Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

El Mor Electric

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in El Mor Electric Installation are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, El Mor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spring Ventures and El Mor

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

The idea behind Spring Ventures and El Mor Electric Installation 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.