Correlation Between Elcora Advanced and Bayhorse Silver

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

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

Diversification Opportunities for Elcora Advanced and Bayhorse Silver

-0.11

Correlation Coefficient

Elcora Advanced  Bayhorse Silver

Good diversification

The 3 months correlation between Elcora and Bayhorse is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Elcora Advanced Materials and Bayhorse Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayhorse Silver and Elcora Advanced 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 Elcora Advanced Materials are associated (or correlated) with Bayhorse Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayhorse Silver has no effect on the direction of Elcora Advanced i.e., Elcora Advanced and Bayhorse Silver go up and down completely randomly.

Pair Corralation between Elcora Advanced and Bayhorse Silver

Assuming the 90 days horizon Elcora Advanced is expected to generate 11.52 times less return on investment than Bayhorse Silver. But when comparing it to its historical volatility, Elcora Advanced Materials is 1.37 times less risky than Bayhorse Silver. It trades about 0.01 of its potential returns per unit of risk. Bayhorse Silver is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Bayhorse Silver on September 5, 2024 and sell it today you would lose (0.30) from holding Bayhorse Silver or give up 7.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Elcora Advanced Materials  vs.  Bayhorse Silver

Elcora Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bayhorse Silver

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bayhorse Silver are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Bayhorse Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elcora Advanced and Bayhorse Silver

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

The idea behind Elcora Advanced Materials and Bayhorse Silver 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.