Correlation Between Element Fleet and Baylin Technologies

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

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

Diversification Opportunities for Element Fleet and Baylin Technologies

0.36

Correlation Coefficient

Element Fleet  Baylin Technologies

Weak diversification

The 3 months correlation between Element and Baylin is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Baylin Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baylin Technologies and Element Fleet 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 Element Fleet Management are associated (or correlated) with Baylin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baylin Technologies has no effect on the direction of Element Fleet i.e., Element Fleet and Baylin Technologies go up and down completely randomly.

Pair Corralation between Element Fleet and Baylin Technologies

Assuming the 90 days trading horizon Element Fleet Management is expected to generate 0.21 times more return on investment than Baylin Technologies. However, Element Fleet Management is 4.75 times less risky than Baylin Technologies. It trades about -0.01 of its potential returns per unit of risk. Baylin Technologies is currently generating about -0.07 per unit of risk. If you would invest  2,895  in Element Fleet Management on December 30, 2024 and sell it today you would lose (25.00) from holding Element Fleet Management or give up 0.86% of portfolio value over 90 days.

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

Element Fleet Management  vs.  Baylin Technologies

Element Fleet Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Element Fleet Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Element Fleet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Baylin Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baylin Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Element Fleet and Baylin Technologies

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

The idea behind Element Fleet Management and Baylin 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.