Correlation Between Elton International and Intertech

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

Diversification Opportunities for Elton International and Intertech

-0.79

Correlation Coefficient

Elton International  Intertech

Pay attention - limited upside

The 3 months correlation between Elton and Intertech is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Elton International Trading and Intertech SA Inter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intertech SA Inter 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 Intertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intertech SA Inter has no effect on the direction of Elton International i.e., Elton International and Intertech go up and down completely randomly.

Pair Corralation between Elton International and Intertech

Assuming the 90 days trading horizon Elton International Trading is expected to generate 0.71 times more return on investment than Intertech. However, Elton International Trading is 1.42 times less risky than Intertech. It trades about 0.1 of its potential returns per unit of risk. Intertech SA Inter is currently generating about -0.11 per unit of risk. If you would invest  170.00  in Elton International Trading on September 5, 2024 and sell it today you would earn a total of  17.00  from holding Elton International Trading or generate 10.0% return on investment over 90 days.

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

Elton International Trading  vs.  Intertech SA Inter

Elton International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elton International Trading are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elton International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intertech SA Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intertech SA Inter has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Elton International and Intertech

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

The idea behind Elton International Trading and Intertech SA Inter 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.