Correlation Between Vita Coco and Electrovaya Common

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Can any of the company-specific risk be diversified away by investing in both Vita Coco and Electrovaya Common 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 Vita Coco and Electrovaya Common into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and Electrovaya Common Shares, you can compare the effects of market volatilities on Vita Coco and Electrovaya Common 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 Vita Coco with a short position of Electrovaya Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Electrovaya Common.

Diversification Opportunities for Vita Coco and Electrovaya Common

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Vita and Electrovaya is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Vita Coco 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 Vita Coco are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Vita Coco i.e., Vita Coco and Electrovaya Common go up and down completely randomly.

Pair Corralation between Vita Coco and Electrovaya Common

Given the investment horizon of 90 days Vita Coco is expected to under-perform the Electrovaya Common. But the stock apears to be less risky and, when comparing its historical volatility, Vita Coco is 3.88 times less risky than Electrovaya Common. The stock trades about -0.22 of its potential returns per unit of risk. The Electrovaya Common Shares is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  273.00  in Electrovaya Common Shares on October 10, 2024 and sell it today you would lose (11.00) from holding Electrovaya Common Shares or give up 4.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Vita Coco  vs.  Electrovaya Common Shares

 Performance 
       Timeline  
Vita Coco 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.
Electrovaya Common Shares 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Vita Coco and Electrovaya Common Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vita Coco and Electrovaya Common

The main advantage of trading using opposite Vita Coco and Electrovaya Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco position performs unexpectedly, Electrovaya Common 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 Electrovaya Common will offset losses from the drop in Electrovaya Common's long position.
The idea behind Vita Coco and Electrovaya Common Shares 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.
Check out your portfolio center.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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