Correlation Between E L and Vitalhub Corp

Can any of the company-specific risk be diversified away by investing in both E L and Vitalhub Corp 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 E L and Vitalhub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E L Financial Corp and Vitalhub Corp, you can compare the effects of market volatilities on E L and Vitalhub Corp 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 E L with a short position of Vitalhub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of E L and Vitalhub Corp.

Diversification Opportunities for E L and Vitalhub Corp

0.2

Correlation Coefficient

E L  Vitalhub Corp

Modest diversification

The 3 months correlation between ELF and Vitalhub is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding E L Financial Corp and Vitalhub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitalhub Corp and E L 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 E L Financial Corp are associated (or correlated) with Vitalhub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitalhub Corp has no effect on the direction of E L i.e., E L and Vitalhub Corp go up and down completely randomly.

Pair Corralation between E L and Vitalhub Corp

Assuming the 90 days trading horizon E L Financial Corp is expected to generate 1.1 times more return on investment than Vitalhub Corp. However, E L is 1.1 times more volatile than Vitalhub Corp. It trades about 0.16 of its potential returns per unit of risk. Vitalhub Corp is currently generating about -0.06 per unit of risk. If you would invest  132,500  in E L Financial Corp on December 2, 2024 and sell it today you would earn a total of  24,299  from holding E L Financial Corp or generate 18.34% return on investment over 90 days.

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

E L Financial Corp  vs.  Vitalhub Corp

E L Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in E L Financial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, E L may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vitalhub Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vitalhub Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with E L and Vitalhub Corp

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

The idea behind E L Financial Corp and Vitalhub Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.