Correlation Between Energy Technologies and EROAD

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

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

Diversification Opportunities for Energy Technologies and EROAD

0.59

Correlation Coefficient

Energy Technologies  EROAD

Very weak diversification

The 3 months correlation between Energy and EROAD is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Energy Technologies Limited and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Energy Technologies 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 Energy Technologies Limited are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Energy Technologies i.e., Energy Technologies and EROAD go up and down completely randomly.

Pair Corralation between Energy Technologies and EROAD

Assuming the 90 days trading horizon Energy Technologies is expected to generate 25.47 times less return on investment than EROAD. But when comparing it to its historical volatility, Energy Technologies Limited is 1.06 times less risky than EROAD. It trades about 0.01 of its potential returns per unit of risk. EROAD is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  79.00  in EROAD on September 20, 2024 and sell it today you would earn a total of  9.00  from holding EROAD or generate 11.39% return on investment over 90 days.

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

Energy Technologies Limited  vs.  EROAD

Energy Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Energy Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

EROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Energy Technologies and EROAD

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

The idea behind Energy Technologies Limited and EROAD 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..