Correlation Between Electra Real and Seach Medical

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

By analyzing existing cross correlation between Electra Real Estate and Seach Medical Group, you can compare the effects of market volatilities on Electra Real and Seach Medical 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 Electra Real with a short position of Seach Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Real and Seach Medical.

Diversification Opportunities for Electra Real and Seach Medical

-0.16

Correlation Coefficient

Electra Real  Seach Medical

Good diversification

The 3 months correlation between Electra and Seach is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Electra Real Estate and Seach Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seach Medical Group and Electra Real 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 Electra Real Estate are associated (or correlated) with Seach Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seach Medical Group has no effect on the direction of Electra Real i.e., Electra Real and Seach Medical go up and down completely randomly.

Pair Corralation between Electra Real and Seach Medical

Assuming the 90 days trading horizon Electra Real Estate is expected to generate 0.78 times more return on investment than Seach Medical. However, Electra Real Estate is 1.28 times less risky than Seach Medical. It trades about 0.01 of its potential returns per unit of risk. Seach Medical Group is currently generating about -0.05 per unit of risk. If you would invest  437,300  in Electra Real Estate on December 30, 2024 and sell it today you would lose (2,400) from holding Electra Real Estate or give up 0.55% of portfolio value over 90 days.

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

Electra Real Estate  vs.  Seach Medical Group

Electra Real Estate

Risk-Adjusted Performance

Very Weak

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

Seach Medical Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seach Medical Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Electra Real and Seach Medical

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

The idea behind Electra Real Estate and Seach Medical Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.