Correlation Between Wool Industry and EL D

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

By analyzing existing cross correlation between Wool Industry Tria and EL D Mouzakis, you can compare the effects of market volatilities on Wool Industry and EL D 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 Wool Industry with a short position of EL D. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wool Industry and EL D.

Diversification Opportunities for Wool Industry and EL D

-0.06

Correlation Coefficient

Wool Industry  EL D

Good diversification

The 3 months correlation between Wool and MOYZK is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wool Industry Tria and EL D Mouzakis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EL D Mouzakis and Wool Industry 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 Wool Industry Tria are associated (or correlated) with EL D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EL D Mouzakis has no effect on the direction of Wool Industry i.e., Wool Industry and EL D go up and down completely randomly.

Pair Corralation between Wool Industry and EL D

Assuming the 90 days trading horizon Wool Industry Tria is expected to generate 3.88 times more return on investment than EL D. However, Wool Industry is 3.88 times more volatile than EL D Mouzakis. It trades about 0.1 of its potential returns per unit of risk. EL D Mouzakis is currently generating about -0.25 per unit of risk. If you would invest  404.00  in Wool Industry Tria on September 12, 2024 and sell it today you would earn a total of  44.00  from holding Wool Industry Tria or generate 10.89% return on investment over 90 days.

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

Wool Industry Tria  vs.  EL D Mouzakis

Wool Industry Tria

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wool Industry Tria are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Wool Industry is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

EL D Mouzakis

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Wool Industry and EL D

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

The idea behind Wool Industry Tria and EL D Mouzakis 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.