Correlation Between Electreon Wireless and Iargento

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

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

Diversification Opportunities for Electreon Wireless and Iargento

-0.18

Correlation Coefficient

Electreon Wireless  Iargento

Good diversification

The 3 months correlation between Electreon and Iargento is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Electreon Wireless and Iargento Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iargento Hi 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 Iargento. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iargento Hi Tech has no effect on the direction of Electreon Wireless i.e., Electreon Wireless and Iargento go up and down completely randomly.

Pair Corralation between Electreon Wireless and Iargento

Assuming the 90 days trading horizon Electreon Wireless is expected to under-perform the Iargento. But the stock apears to be less risky and, when comparing its historical volatility, Electreon Wireless is 2.28 times less risky than Iargento. The stock trades about -0.23 of its potential returns per unit of risk. The Iargento Hi Tech is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,630  in Iargento Hi Tech on October 7, 2024 and sell it today you would earn a total of  80.00  from holding Iargento Hi Tech or generate 0.93% 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.  Iargento Hi Tech

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.

Iargento Hi Tech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iargento Hi Tech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iargento sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electreon Wireless and Iargento

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

The idea behind Electreon Wireless and Iargento Hi 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.