Correlation Between Electreon Wireless and Augwind Energy

Can any of the company-specific risk be diversified away by investing in both Electreon Wireless and Augwind Energy 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 Electreon Wireless and Augwind Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Electreon Wireless and Augwind Energy Tech, you can compare the effects of market volatilities on Electreon Wireless and Augwind Energy 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 Electreon Wireless with a short position of Augwind Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electreon Wireless and Augwind Energy.

Diversification Opportunities for Electreon Wireless and Augwind Energy

0.7

Correlation Coefficient

Electreon Wireless  Augwind Energy

Poor diversification

The 3 months correlation between Electreon and Augwind is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Electreon Wireless and Augwind Energy Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Augwind Energy Tech and Electreon Wireless 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 Electreon Wireless are associated (or correlated) with Augwind Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Augwind Energy Tech has no effect on the direction of Electreon Wireless i.e., Electreon Wireless and Augwind Energy go up and down completely randomly.

Pair Corralation between Electreon Wireless and Augwind Energy

Assuming the 90 days trading horizon Electreon Wireless is expected to under-perform the Augwind Energy. But the stock apears to be less risky and, when comparing its historical volatility, Electreon Wireless is 1.22 times less risky than Augwind Energy. The stock trades about -0.27 of its potential returns per unit of risk. The Augwind Energy Tech is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  46,390  in Augwind Energy Tech on September 12, 2024 and sell it today you would earn a total of  13,910  from holding Augwind Energy Tech or generate 29.98% return on investment over 90 days.

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

Electreon Wireless  vs.  Augwind Energy Tech

Electreon Wireless

Risk-Adjusted Performance

3 of 100

Insignificant

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

Augwind Energy Tech

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Augwind Energy Tech are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Augwind Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electreon Wireless and Augwind Energy

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

The idea behind Electreon Wireless and Augwind Energy Tech 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..