Correlation Between Ablerex Electronics and Excellence Optoelectronic

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

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

Diversification Opportunities for Ablerex Electronics and Excellence Optoelectronic

0.76

Correlation Coefficient

Ablerex Electronics  Excellence Optoelectronic

Poor diversification

The 3 months correlation between Ablerex and Excellence is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ablerex Electronics Co and Excellence Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excellence Optoelectronic and Ablerex Electronics 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 Ablerex Electronics Co are associated (or correlated) with Excellence Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excellence Optoelectronic has no effect on the direction of Ablerex Electronics i.e., Ablerex Electronics and Excellence Optoelectronic go up and down completely randomly.

Pair Corralation between Ablerex Electronics and Excellence Optoelectronic

Assuming the 90 days trading horizon Ablerex Electronics is expected to generate 2.91 times less return on investment than Excellence Optoelectronic. But when comparing it to its historical volatility, Ablerex Electronics Co is 1.42 times less risky than Excellence Optoelectronic. It trades about 0.07 of its potential returns per unit of risk. Excellence Optoelectronic is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,515  in Excellence Optoelectronic on December 5, 2024 and sell it today you would earn a total of  105.00  from holding Excellence Optoelectronic or generate 4.17% return on investment over 90 days.

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

Ablerex Electronics Co  vs.  Excellence Optoelectronic

Ablerex Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ablerex Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Excellence Optoelectronic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Excellence Optoelectronic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Ablerex Electronics and Excellence Optoelectronic

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

The idea behind Ablerex Electronics Co and Excellence Optoelectronic 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.