Correlation Between State Grid and Integrated Electronic

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

By analyzing existing cross correlation between State Grid InformationCommunication and Integrated Electronic Systems, you can compare the effects of market volatilities on State Grid and Integrated Electronic 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 State Grid with a short position of Integrated Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Grid and Integrated Electronic.

Diversification Opportunities for State Grid and Integrated Electronic

0.61

Correlation Coefficient

State Grid  Integrated Electronic

Poor diversification

The 3 months correlation between State and Integrated is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding State Grid InformationCommunic and Integrated Electronic Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Electronic and State Grid 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 State Grid InformationCommunication are associated (or correlated) with Integrated Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Electronic has no effect on the direction of State Grid i.e., State Grid and Integrated Electronic go up and down completely randomly.

Pair Corralation between State Grid and Integrated Electronic

Assuming the 90 days trading horizon State Grid is expected to generate 2.46 times less return on investment than Integrated Electronic. In addition to that, State Grid is 1.15 times more volatile than Integrated Electronic Systems. It trades about 0.05 of its total potential returns per unit of risk. Integrated Electronic Systems is currently generating about 0.14 per unit of volatility. If you would invest  683.00  in Integrated Electronic Systems on December 2, 2024 and sell it today you would earn a total of  80.00  from holding Integrated Electronic Systems or generate 11.71% return on investment over 90 days.

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

State Grid InformationCommunic  vs.  Integrated Electronic Systems

State Grid Informati

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Grid InformationCommunication 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Integrated Electronic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Integrated Electronic Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Integrated Electronic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with State Grid and Integrated Electronic

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

The idea behind State Grid InformationCommunication and Integrated Electronic Systems 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.