Correlation Between Electrovaya Common and Connecticut Light

Can any of the company-specific risk be diversified away by investing in both Electrovaya Common and Connecticut Light 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 Electrovaya Common and Connecticut Light into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electrovaya Common Shares and The Connecticut Light, you can compare the effects of market volatilities on Electrovaya Common and Connecticut Light 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 Electrovaya Common with a short position of Connecticut Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electrovaya Common and Connecticut Light.

Diversification Opportunities for Electrovaya Common and Connecticut Light

-0.19

Correlation Coefficient

Electrovaya Common  Connecticut Light

Good diversification

The 3 months correlation between Electrovaya and Connecticut is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and The Connecticut Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connecticut Light and Electrovaya Common 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 Electrovaya Common Shares are associated (or correlated) with Connecticut Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connecticut Light has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and Connecticut Light go up and down completely randomly.

Pair Corralation between Electrovaya Common and Connecticut Light

Given the investment horizon of 90 days Electrovaya Common Shares is expected to generate 3.32 times more return on investment than Connecticut Light. However, Electrovaya Common is 3.32 times more volatile than The Connecticut Light. It trades about 0.11 of its potential returns per unit of risk. The Connecticut Light is currently generating about 0.14 per unit of risk. If you would invest  223.00  in Electrovaya Common Shares on December 24, 2024 and sell it today you would earn a total of  53.00  from holding Electrovaya Common Shares or generate 23.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Electrovaya Common Shares  vs.  The Connecticut Light

Electrovaya Common Shares

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Connecticut Light

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Connecticut Light are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical indicators, Connecticut Light may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Electrovaya Common and Connecticut Light

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

The idea behind Electrovaya Common Shares and The Connecticut Light 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.