Correlation Between Adaptive Plasma and Elentec

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

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

Diversification Opportunities for Adaptive Plasma and Elentec

0.89

Correlation Coefficient

Adaptive Plasma  Elentec

Very poor diversification

The 3 months correlation between Adaptive and Elentec is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Adaptive Plasma Technology and Elentec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elentec and Adaptive Plasma 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 Adaptive Plasma Technology are associated (or correlated) with Elentec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elentec has no effect on the direction of Adaptive Plasma i.e., Adaptive Plasma and Elentec go up and down completely randomly.

Pair Corralation between Adaptive Plasma and Elentec

Assuming the 90 days trading horizon Adaptive Plasma Technology is expected to under-perform the Elentec. But the stock apears to be less risky and, when comparing its historical volatility, Adaptive Plasma Technology is 1.01 times less risky than Elentec. The stock trades about -0.11 of its potential returns per unit of risk. The Elentec Co is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  802,000  in Elentec Co on October 22, 2024 and sell it today you would lose (303,000) from holding Elentec Co or give up 37.78% of portfolio value over 90 days.

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

Adaptive Plasma Technology  vs.  Elentec Co

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Elentec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elentec Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Adaptive Plasma and Elentec

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

The idea behind Adaptive Plasma Technology and Elentec Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.