Correlation Between Electrovaya Common and Supercom

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

Diversification Opportunities for Electrovaya Common and Supercom

0.09

Correlation Coefficient

Electrovaya Common  Supercom

Significant diversification

The 3 months correlation between Electrovaya and Supercom is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom 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 Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and Supercom go up and down completely randomly.

Pair Corralation between Electrovaya Common and Supercom

Given the investment horizon of 90 days Electrovaya Common Shares is expected to under-perform the Supercom. But the stock apears to be less risky and, when comparing its historical volatility, Electrovaya Common Shares is 3.28 times less risky than Supercom. The stock trades about -0.04 of its potential returns per unit of risk. The Supercom is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  366.00  in Supercom on November 29, 2024 and sell it today you would earn a total of  494.00  from holding Supercom or generate 134.97% return on investment over 90 days.

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

Electrovaya Common Shares  vs.  Supercom

Electrovaya Common Shares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Supercom

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Supercom sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electrovaya Common and Supercom

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

The idea behind Electrovaya Common Shares and Supercom 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.