Correlation Between Elcom Technology and Construction JSC

Can any of the company-specific risk be diversified away by investing in both Elcom Technology and Construction JSC 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 Construction JSC 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 Construction JSC No5, you can compare the effects of market volatilities on Elcom Technology and Construction JSC 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 Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and Construction JSC.

Diversification Opportunities for Elcom Technology and Construction JSC

0.28

Correlation Coefficient

Elcom Technology  Construction JSC

Modest diversification

The 3 months correlation between Elcom and Construction is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 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 Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of Elcom Technology i.e., Elcom Technology and Construction JSC go up and down completely randomly.

Pair Corralation between Elcom Technology and Construction JSC

Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 0.64 times more return on investment than Construction JSC. However, Elcom Technology Communications is 1.57 times less risky than Construction JSC. It trades about 0.1 of its potential returns per unit of risk. Construction JSC No5 is currently generating about 0.02 per unit of risk. If you would invest  914,290  in Elcom Technology Communications on December 5, 2024 and sell it today you would earn a total of  1,695,710  from holding Elcom Technology Communications or generate 185.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.14%
Values	Daily Returns

Elcom Technology Communication  vs.  Construction JSC No5

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 very healthy fundamental indicators, Elcom Technology is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Construction JSC No5

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Construction JSC No5 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction JSC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Elcom Technology and Construction JSC

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

The idea behind Elcom Technology Communications and Construction JSC No5 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.