Correlation Between Salomon A and Eldav L

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

By analyzing existing cross correlation between Salomon A Angel and Eldav L, you can compare the effects of market volatilities on Salomon A and Eldav L 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 Salomon A with a short position of Eldav L. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salomon A and Eldav L.

Diversification Opportunities for Salomon A and Eldav L

0.02

Correlation Coefficient

Salomon A  Eldav L

Significant diversification

The 3 months correlation between Salomon and Eldav is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Salomon A Angel and Eldav L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldav L and Salomon A 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 Salomon A Angel are associated (or correlated) with Eldav L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldav L has no effect on the direction of Salomon A i.e., Salomon A and Eldav L go up and down completely randomly.

Pair Corralation between Salomon A and Eldav L

Assuming the 90 days trading horizon Salomon A Angel is expected to under-perform the Eldav L. In addition to that, Salomon A is 1.71 times more volatile than Eldav L. It trades about -0.01 of its total potential returns per unit of risk. Eldav L is currently generating about 0.08 per unit of volatility. If you would invest  25,010  in Eldav L on December 22, 2024 and sell it today you would earn a total of  1,990  from holding Eldav L or generate 7.96% return on investment over 90 days.

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

Salomon A Angel  vs.  Eldav L

Salomon A Angel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salomon A Angel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Salomon A is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eldav L

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eldav L are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eldav L may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Salomon A and Eldav L

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

The idea behind Salomon A Angel and Eldav L 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.