Correlation Between Electro Sensors and Giga Tronics

Can any of the company-specific risk be diversified away by investing in both Electro Sensors and Giga Tronics 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 Electro Sensors and Giga Tronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electro Sensors and Giga tronics, you can compare the effects of market volatilities on Electro Sensors and Giga Tronics 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 Electro Sensors with a short position of Giga Tronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electro Sensors and Giga Tronics.

Diversification Opportunities for Electro Sensors and Giga Tronics

-0.42

Correlation Coefficient

Electro Sensors  Giga Tronics

Very good diversification

The 3 months correlation between Electro and Giga is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Electro Sensors and Giga tronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga tronics and Electro Sensors 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 Electro Sensors are associated (or correlated) with Giga Tronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga tronics has no effect on the direction of Electro Sensors i.e., Electro Sensors and Giga Tronics go up and down completely randomly.

Pair Corralation between Electro Sensors and Giga Tronics

If you would invest  398.00  in Electro Sensors on September 4, 2024 and sell it today you would earn a total of  51.00  from holding Electro Sensors or generate 12.81% return on investment over 90 days.

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

Electro Sensors  vs.  Giga tronics

Electro Sensors

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electro Sensors are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Electro Sensors exhibited solid returns over the last few months and may actually be approaching a breakup point.

Giga tronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Giga tronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, Giga Tronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electro Sensors and Giga Tronics

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

The idea behind Electro Sensors and Giga tronics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.