Correlation Between Elcom Technology and Petrolimex International

Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Petrolimex International 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 Petrolimex International 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 Petrolimex International Trading, you can compare the effects of market volatilities on Elcom Technology and Petrolimex International 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 Petrolimex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Petrolimex International.

Diversification Opportunities for Elcom Technology and Petrolimex International

-0.65

Correlation Coefficient

Elcom Technology  Petrolimex International

Excellent diversification

The 3 months correlation between Elcom and Petrolimex is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Petrolimex International Tradi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex International 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 Petrolimex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex International has no effect on the direction of Elcom Technology i.e., Elcom Technology and Petrolimex International go up and down completely randomly.

Pair Corralation between Elcom Technology and Petrolimex International

Assuming the 90 days trading horizon Elcom Technology Communications is expected to under-perform the Petrolimex International. But the stock apears to be less risky and, when comparing its historical volatility, Elcom Technology Communications is 1.04 times less risky than Petrolimex International. The stock trades about -0.09 of its potential returns per unit of risk. The Petrolimex International Trading is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  548,000  in Petrolimex International Trading on December 23, 2024 and sell it today you would earn a total of  111,000  from holding Petrolimex International Trading or generate 20.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.67%
Values	Daily Returns

Elcom Technology Communication  vs.  Petrolimex International Tradi

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 unfluctuating 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.

Petrolimex International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex International Trading are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elcom Technology and Petrolimex International

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

The idea behind Elcom Technology Communications and Petrolimex International Trading 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.