Correlation Between Elcom Technology and Industrial Urban

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

By analyzing existing cross correlation between Elcom Technology Communications and Industrial Urban Development, you can compare the effects of market volatilities on Elcom Technology and Industrial Urban 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 Elcom Technology with a short position of Industrial Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Industrial Urban.

Diversification Opportunities for Elcom Technology and Industrial Urban

-0.41

Correlation Coefficient

Elcom Technology  Industrial Urban

Very good diversification

The 3 months correlation between Elcom and Industrial is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Industrial Urban Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Urban Dev and Elcom Technology 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 Elcom Technology Communications are associated (or correlated) with Industrial Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Urban Dev has no effect on the direction of Elcom Technology i.e., Elcom Technology and Industrial Urban go up and down completely randomly.

Pair Corralation between Elcom Technology and Industrial Urban

Assuming the 90 days trading horizon Elcom Technology Communications is expected to under-perform the Industrial Urban. In addition to that, Elcom Technology is 1.75 times more volatile than Industrial Urban Development. It trades about -0.09 of its total potential returns per unit of risk. Industrial Urban Development is currently generating about 0.28 per unit of volatility. If you would invest  3,200,000  in Industrial Urban Development on December 22, 2024 and sell it today you would earn a total of  860,000  from holding Industrial Urban Development or generate 26.88% return on investment over 90 days.

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

Elcom Technology Communication  vs.  Industrial Urban Development

Elcom Technology Com

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elcom Technology Communications 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 fundamental 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.

Industrial Urban Dev

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Urban Development are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Industrial Urban displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elcom Technology and Industrial Urban

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

The idea behind Elcom Technology Communications and Industrial Urban Development 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.