Correlation Between Electrovaya Common and Drive Shack

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

Diversification Opportunities for Electrovaya Common and Drive Shack

-0.53

Correlation Coefficient

Electrovaya Common  Drive Shack

Excellent diversification

The 3 months correlation between Electrovaya and Drive is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Drive Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drive Shack 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 Drive Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drive Shack has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and Drive Shack go up and down completely randomly.

Pair Corralation between Electrovaya Common and Drive Shack

If you would invest  231.00  in Electrovaya Common Shares on October 11, 2024 and sell it today you would earn a total of  19.00  from holding Electrovaya Common Shares or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.61%
Values	Daily Returns

Electrovaya Common Shares  vs.  Drive Shack

Electrovaya Common Shares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Drive Shack

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Drive Shack has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Drive Shack is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Electrovaya Common and Drive Shack

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

The idea behind Electrovaya Common Shares and Drive Shack 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.