Correlation Between Electronic Arts and Electro Ao

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

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

Diversification Opportunities for Electronic Arts and Electro Ao

-0.26

Correlation Coefficient

Electronic Arts  Electro Ao

Very good diversification

The 3 months correlation between Electronic and Electro is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Electronic Arts and Electro Ao Altona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro Ao Altona and Electronic Arts 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 Electronic Arts are associated (or correlated) with Electro Ao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro Ao Altona has no effect on the direction of Electronic Arts i.e., Electronic Arts and Electro Ao go up and down completely randomly.

Pair Corralation between Electronic Arts and Electro Ao

Assuming the 90 days trading horizon Electronic Arts is expected to under-perform the Electro Ao. In addition to that, Electronic Arts is 2.33 times more volatile than Electro Ao Altona. It trades about -0.02 of its total potential returns per unit of risk. Electro Ao Altona is currently generating about 0.07 per unit of volatility. If you would invest  1,308  in Electro Ao Altona on December 31, 2024 and sell it today you would earn a total of  74.00  from holding Electro Ao Altona or generate 5.66% return on investment over 90 days.

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

Electronic Arts  vs.  Electro Ao Altona

Electronic Arts

Risk-Adjusted Performance

Very Weak

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

Electro Ao Altona

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electro Ao Altona are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Electro Ao is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Electronic Arts and Electro Ao

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

The idea behind Electronic Arts and Electro Ao Altona 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.