Correlation Between Elong Power and Powell Industries

Can any of the company-specific risk be diversified away by investing in both Elong Power and Powell Industries 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 Elong Power and Powell Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elong Power Holding and Powell Industries, you can compare the effects of market volatilities on Elong Power and Powell Industries 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 Elong Power with a short position of Powell Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elong Power and Powell Industries.

Diversification Opportunities for Elong Power and Powell Industries

0.52

Correlation Coefficient

Elong Power  Powell Industries

Very weak diversification

The 3 months correlation between Elong and Powell is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Elong Power Holding and Powell Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Industries and Elong Power 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 Elong Power Holding are associated (or correlated) with Powell Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Industries has no effect on the direction of Elong Power i.e., Elong Power and Powell Industries go up and down completely randomly.

Pair Corralation between Elong Power and Powell Industries

Given the investment horizon of 90 days Elong Power Holding is expected to under-perform the Powell Industries. In addition to that, Elong Power is 1.83 times more volatile than Powell Industries. It trades about -0.32 of its total potential returns per unit of risk. Powell Industries is currently generating about -0.55 per unit of volatility. If you would invest  23,550  in Powell Industries on December 4, 2024 and sell it today you would lose (7,940) from holding Powell Industries or give up 33.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Elong Power Holding  vs.  Powell Industries

Elong Power Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elong Power Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Powell Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Powell Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Elong Power and Powell Industries

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

The idea behind Elong Power Holding and Powell Industries 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.