Correlation Between ECSTELECOM and Adaptive Plasma

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

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

Diversification Opportunities for ECSTELECOM and Adaptive Plasma

0.14

Correlation Coefficient

ECSTELECOM  Adaptive Plasma

Average diversification

The 3 months correlation between ECSTELECOM and Adaptive is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and Adaptive Plasma Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Plasma Tech and ECSTELECOM 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 ECSTELECOM Co are associated (or correlated) with Adaptive Plasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Plasma Tech has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and Adaptive Plasma go up and down completely randomly.

Pair Corralation between ECSTELECOM and Adaptive Plasma

Assuming the 90 days trading horizon ECSTELECOM is expected to generate 3.34 times less return on investment than Adaptive Plasma. But when comparing it to its historical volatility, ECSTELECOM Co is 3.92 times less risky than Adaptive Plasma. It trades about 0.1 of its potential returns per unit of risk. Adaptive Plasma Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  672,000  in Adaptive Plasma Technology on September 19, 2024 and sell it today you would earn a total of  44,000  from holding Adaptive Plasma Technology or generate 6.55% return on investment over 90 days.

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

ECSTELECOM Co  vs.  Adaptive Plasma Technology

ECSTELECOM

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECSTELECOM Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ECSTELECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Adaptive Plasma Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptive Plasma Technology 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.

Pair Trading with ECSTELECOM and Adaptive Plasma

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

The idea behind ECSTELECOM Co and Adaptive Plasma Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.