Correlation Between Elamex SA and LeanLife Health

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

By analyzing existing cross correlation between Elamex SA de and LeanLife Health, you can compare the effects of market volatilities on Elamex SA and LeanLife Health 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 Elamex SA with a short position of LeanLife Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elamex SA and LeanLife Health.

Diversification Opportunities for Elamex SA and LeanLife Health

1.0

Correlation Coefficient

Elamex SA  LeanLife Health

No risk reduction

The 3 months correlation between Elamex and LeanLife is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Elamex SA de and LeanLife Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LeanLife Health and Elamex SA 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 Elamex SA de are associated (or correlated) with LeanLife Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LeanLife Health has no effect on the direction of Elamex SA i.e., Elamex SA and LeanLife Health go up and down completely randomly.

Pair Corralation between Elamex SA and LeanLife Health

If you would invest  0.50  in LeanLife Health on October 15, 2024 and sell it today you would earn a total of  0.00  from holding LeanLife Health or generate 0.0% return on investment over 90 days.

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

Elamex SA de  vs.  LeanLife Health

Elamex SA de

Risk-Adjusted Performance

0 of 100

Very Weak

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

LeanLife Health

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elamex SA and LeanLife Health

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

The idea behind Elamex SA de and LeanLife Health 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.