Correlation Between Electreon Wireless and Computer Direct

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

By analyzing existing cross correlation between Electreon Wireless and Computer Direct, you can compare the effects of market volatilities on Electreon Wireless and Computer Direct 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 Computer Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electreon Wireless and Computer Direct.

Diversification Opportunities for Electreon Wireless and Computer Direct

-0.05

Correlation Coefficient

Electreon Wireless  Computer Direct

Good diversification

The 3 months correlation between Electreon and Computer is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Electreon Wireless and Computer Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Direct 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 Computer Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Direct has no effect on the direction of Electreon Wireless i.e., Electreon Wireless and Computer Direct go up and down completely randomly.

Pair Corralation between Electreon Wireless and Computer Direct

Assuming the 90 days trading horizon Electreon Wireless is expected to under-perform the Computer Direct. In addition to that, Electreon Wireless is 1.16 times more volatile than Computer Direct. It trades about -0.23 of its total potential returns per unit of risk. Computer Direct is currently generating about 0.08 per unit of volatility. If you would invest  3,729,189  in Computer Direct on October 7, 2024 and sell it today you would earn a total of  81,811  from holding Computer Direct or generate 2.19% return on investment over 90 days.

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

Electreon Wireless  vs.  Computer Direct

Electreon Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electreon Wireless 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.

Computer Direct

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Computer Direct are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Computer Direct sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electreon Wireless and Computer Direct

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

The idea behind Electreon Wireless and Computer Direct 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.