Correlation Between Elton International and General Commercial

Can any of the company-specific risk be diversified away by investing in both Elton International and General 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 General 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 General Commercial Industrial, you can compare the effects of market volatilities on Elton International and General 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 General Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elton International and General Commercial.

Diversification Opportunities for Elton International and General Commercial

-0.17

Correlation Coefficient

Elton International  General Commercial

Good diversification

The 3 months correlation between Elton and General is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Elton International Trading and General Commercial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Commercial 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 General Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Commercial has no effect on the direction of Elton International i.e., Elton International and General Commercial go up and down completely randomly.

Pair Corralation between Elton International and General Commercial

Assuming the 90 days trading horizon Elton International Trading is expected to under-perform the General Commercial. But the stock apears to be less risky and, when comparing its historical volatility, Elton International Trading is 1.3 times less risky than General Commercial. The stock trades about -0.05 of its potential returns per unit of risk. The General Commercial Industrial is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  140.00  in General Commercial Industrial on December 30, 2024 and sell it today you would earn a total of  8.00  from holding General Commercial Industrial or generate 5.71% 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.  General 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.

General Commercial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Commercial Industrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, General Commercial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Elton International and General Commercial

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

The idea behind Elton International Trading and General 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.