Correlation Between Element Solutions and Crown Electrokinetics

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

By analyzing existing cross correlation between Element Solutions and Crown Electrokinetics Corp, you can compare the effects of market volatilities on Element Solutions and Crown Electrokinetics 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 Element Solutions with a short position of Crown Electrokinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Solutions and Crown Electrokinetics.

Diversification Opportunities for Element Solutions and Crown Electrokinetics

-0.09

Correlation Coefficient

Element Solutions  Crown Electrokinetics

Good diversification

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

Pair Corralation between Element Solutions and Crown Electrokinetics

Considering the 90-day investment horizon Element Solutions is expected to generate 0.14 times more return on investment than Crown Electrokinetics. However, Element Solutions is 7.38 times less risky than Crown Electrokinetics. It trades about -0.09 of its potential returns per unit of risk. Crown Electrokinetics Corp is currently generating about -0.26 per unit of risk. If you would invest  2,543  in Element Solutions on December 28, 2024 and sell it today you would lose (251.00) from holding Element Solutions or give up 9.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.41%
Values	Daily Returns

Element Solutions  vs.  Crown Electrokinetics Corp

Element Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Element Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Crown Electrokinetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Element Solutions and Crown Electrokinetics

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

The idea behind Element Solutions and Crown Electrokinetics Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.