Correlation Between Elton International and As Commercial

Can any of the company-specific risk be diversified away by investing in both Elton International and As Commercial 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 Elton International and As Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Elton International Trading and As Commercial Industrial, you can compare the effects of market volatilities on Elton International and As Commercial 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 Elton International with a short position of As Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elton International and As Commercial.

Diversification Opportunities for Elton International and As Commercial

-0.29

Correlation Coefficient

Elton International  As Commercial

Very good diversification

The 3 months correlation between Elton and ASCO is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Elton International Trading and As Commercial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on As Commercial Industrial and Elton International 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 Elton International Trading are associated (or correlated) with As Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of As Commercial Industrial has no effect on the direction of Elton International i.e., Elton International and As Commercial go up and down completely randomly.

Pair Corralation between Elton International and As Commercial

Assuming the 90 days trading horizon Elton International Trading is expected to under-perform the As Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Elton International Trading is 1.34 times less risky than As Commercial. The stock trades about -0.07 of its potential returns per unit of risk. The As Commercial Industrial is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  263.00  in As Commercial Industrial on December 2, 2024 and sell it today you would earn a total of  47.00  from holding As Commercial Industrial or generate 17.87% return on investment over 90 days.

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

Elton International Trading  vs.  As Commercial Industrial

Elton International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elton International Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Elton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

As Commercial Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in As Commercial Industrial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, As Commercial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elton International and As Commercial

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

The idea behind Elton International Trading and As Commercial Industrial 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.