Correlation Between Espey Mfg and ADS TEC

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Can any of the company-specific risk be diversified away by investing in both Espey Mfg and ADS TEC 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 Espey Mfg and ADS TEC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Espey Mfg Electronics and ADS TEC ENERGY PLC, you can compare the effects of market volatilities on Espey Mfg and ADS TEC 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 Espey Mfg with a short position of ADS TEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Espey Mfg and ADS TEC.

Diversification Opportunities for Espey Mfg and ADS TEC

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Espey and ADS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Espey Mfg Electronics and ADS TEC ENERGY PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADS TEC ENERGY and Espey Mfg 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 Espey Mfg Electronics are associated (or correlated) with ADS TEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADS TEC ENERGY has no effect on the direction of Espey Mfg i.e., Espey Mfg and ADS TEC go up and down completely randomly.

Pair Corralation between Espey Mfg and ADS TEC

Considering the 90-day investment horizon Espey Mfg Electronics is expected to under-perform the ADS TEC. But the stock apears to be less risky and, when comparing its historical volatility, Espey Mfg Electronics is 2.4 times less risky than ADS TEC. The stock trades about -0.08 of its potential returns per unit of risk. The ADS TEC ENERGY PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  360.00  in ADS TEC ENERGY PLC on December 27, 2024 and sell it today you would lose (53.00) from holding ADS TEC ENERGY PLC or give up 14.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Espey Mfg Electronics  vs.  ADS TEC ENERGY PLC

 Performance 
       Timeline  
Espey Mfg Electronics 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Espey Mfg Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
ADS TEC ENERGY 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ADS TEC ENERGY PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Espey Mfg and ADS TEC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Espey Mfg and ADS TEC

The main advantage of trading using opposite Espey Mfg and ADS TEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Espey Mfg position performs unexpectedly, ADS TEC 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 ADS TEC will offset losses from the drop in ADS TEC's long position.
The idea behind Espey Mfg Electronics and ADS TEC ENERGY PLC 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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