Correlation Between Electronic Systems and TESSCO Technologies

Can any of the company-specific risk be diversified away by investing in both Electronic Systems and TESSCO Technologies 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 Electronic Systems and TESSCO Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electronic Systems Technology and TESSCO Technologies Incorporated, you can compare the effects of market volatilities on Electronic Systems and TESSCO Technologies 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 Electronic Systems with a short position of TESSCO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electronic Systems and TESSCO Technologies.

Diversification Opportunities for Electronic Systems and TESSCO Technologies

-0.42

Correlation Coefficient

Electronic Systems  TESSCO Technologies

Very good diversification

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

Pair Corralation between Electronic Systems and TESSCO Technologies

If you would invest  899.00  in TESSCO Technologies Incorporated on September 5, 2024 and sell it today you would earn a total of  0.00  from holding TESSCO Technologies Incorporated or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Electronic Systems Technology  vs.  TESSCO Technologies Incorporat

Electronic Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electronic Systems Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

TESSCO Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Electronic Systems and TESSCO Technologies

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

The idea behind Electronic Systems Technology and TESSCO Technologies Incorporated 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.