Correlation Between Ecolab and Connexa Sports

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

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

Diversification Opportunities for Ecolab and Connexa Sports

0.61

Correlation Coefficient

Ecolab  Connexa Sports

Poor diversification

The 3 months correlation between Ecolab and Connexa is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Connexa Sports Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connexa Sports Techn and Ecolab 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 Ecolab Inc are associated (or correlated) with Connexa Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connexa Sports Techn has no effect on the direction of Ecolab i.e., Ecolab and Connexa Sports go up and down completely randomly.

Pair Corralation between Ecolab and Connexa Sports

Considering the 90-day investment horizon Ecolab Inc is expected to generate 0.1 times more return on investment than Connexa Sports. However, Ecolab Inc is 9.8 times less risky than Connexa Sports. It trades about 0.06 of its potential returns per unit of risk. Connexa Sports Technologies is currently generating about -0.43 per unit of risk. If you would invest  23,936  in Ecolab Inc on October 26, 2024 and sell it today you would earn a total of  270.00  from holding Ecolab Inc or generate 1.13% return on investment over 90 days.

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

Ecolab Inc  vs.  Connexa Sports Technologies

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Connexa Sports Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Connexa Sports Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Ecolab and Connexa Sports

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

The idea behind Ecolab Inc and Connexa Sports Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.