Correlation Between Gauzy and Espey Mfg

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

By analyzing existing cross correlation between Gauzy Ltd Ordinary and Espey Mfg Electronics, you can compare the effects of market volatilities on Gauzy and Espey Mfg 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 Gauzy with a short position of Espey Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gauzy and Espey Mfg.

Diversification Opportunities for Gauzy and Espey Mfg

0.33

Correlation Coefficient

Gauzy  Espey Mfg

Weak diversification

The 3 months correlation between Gauzy and Espey is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Gauzy Ltd Ordinary and Espey Mfg Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Espey Mfg Electronics and Gauzy 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 Gauzy Ltd Ordinary are associated (or correlated) with Espey Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Espey Mfg Electronics has no effect on the direction of Gauzy i.e., Gauzy and Espey Mfg go up and down completely randomly.

Pair Corralation between Gauzy and Espey Mfg

Given the investment horizon of 90 days Gauzy Ltd Ordinary is expected to under-perform the Espey Mfg. In addition to that, Gauzy is 2.33 times more volatile than Espey Mfg Electronics. It trades about -0.02 of its total potential returns per unit of risk. Espey Mfg Electronics is currently generating about -0.05 per unit of volatility. If you would invest  2,997  in Espey Mfg Electronics on December 28, 2024 and sell it today you would lose (234.00) from holding Espey Mfg Electronics or give up 7.81% of portfolio value over 90 days.

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

Gauzy Ltd Ordinary  vs.  Espey Mfg Electronics

Gauzy Ordinary

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gauzy Ltd Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of 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.

Espey Mfg Electronics

Risk-Adjusted Performance

Very Weak

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.

Pair Trading with Gauzy and Espey Mfg

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

The idea behind Gauzy Ltd Ordinary and Espey Mfg Electronics 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.