Correlation Between Elentec Co and Nuintek CoLtd
Can any of the company-specific risk be diversified away by investing in both Elentec Co and Nuintek CoLtd 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 Elentec Co and Nuintek CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elentec Co and Nuintek CoLtd, you can compare the effects of market volatilities on Elentec Co and Nuintek CoLtd 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 Elentec Co with a short position of Nuintek CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elentec Co and Nuintek CoLtd.
Diversification Opportunities for Elentec Co and Nuintek CoLtd
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Elentec and Nuintek is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Elentec Co and Nuintek CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuintek CoLtd and Elentec Co 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 Elentec Co are associated (or correlated) with Nuintek CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuintek CoLtd has no effect on the direction of Elentec Co i.e., Elentec Co and Nuintek CoLtd go up and down completely randomly.
Pair Corralation between Elentec Co and Nuintek CoLtd
Assuming the 90 days trading horizon Elentec Co is expected to generate 1.69 times more return on investment than Nuintek CoLtd. However, Elentec Co is 1.69 times more volatile than Nuintek CoLtd. It trades about -0.05 of its potential returns per unit of risk. Nuintek CoLtd is currently generating about -0.09 per unit of risk. If you would invest 555,000 in Elentec Co on September 23, 2024 and sell it today you would lose (48,000) from holding Elentec Co or give up 8.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Elentec Co vs. Nuintek CoLtd
Performance |
Timeline |
Elentec Co |
Nuintek CoLtd |
Elentec Co and Nuintek CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elentec Co and Nuintek CoLtd
The main advantage of trading using opposite Elentec Co and Nuintek CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elentec Co position performs unexpectedly, Nuintek CoLtd 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 Nuintek CoLtd will offset losses from the drop in Nuintek CoLtd's long position.Elentec Co vs. Busan Industrial Co | Elentec Co vs. Busan Ind | Elentec Co vs. Mirae Asset Daewoo | Elentec Co vs. Shinhan WTI Futures |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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