Correlation Between Envela Corp and CyberAgent

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

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

Diversification Opportunities for Envela Corp and CyberAgent

0.73

Correlation Coefficient

Envela Corp  CyberAgent

Poor diversification

The 3 months correlation between Envela and CyberAgent is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Envela Corp and CyberAgent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CyberAgent and Envela Corp 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 Envela Corp are associated (or correlated) with CyberAgent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CyberAgent has no effect on the direction of Envela Corp i.e., Envela Corp and CyberAgent go up and down completely randomly.

Pair Corralation between Envela Corp and CyberAgent

Assuming the 90 days trading horizon Envela Corp is expected to generate 0.74 times more return on investment than CyberAgent. However, Envela Corp is 1.35 times less risky than CyberAgent. It trades about 0.58 of its potential returns per unit of risk. CyberAgent is currently generating about -0.15 per unit of risk. If you would invest  655.00  in Envela Corp on October 13, 2024 and sell it today you would earn a total of  15.00  from holding Envela Corp or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	16.67%
Values	Daily Returns

Envela Corp  vs.  CyberAgent

Envela Corp

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Envela Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, Envela Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

CyberAgent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CyberAgent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CyberAgent is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Envela Corp and CyberAgent

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

The idea behind Envela Corp and CyberAgent 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.