Correlation Between Long An and Elcom Technology

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

By analyzing existing cross correlation between Long An Food and Elcom Technology Communications, you can compare the effects of market volatilities on Long An and Elcom Technology 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 Long An with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long An and Elcom Technology.

Diversification Opportunities for Long An and Elcom Technology

0.48

Correlation Coefficient

Long An  Elcom Technology

Very weak diversification

The 3 months correlation between Long and Elcom is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Long An Food and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and Long An 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 Long An Food are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Long An i.e., Long An and Elcom Technology go up and down completely randomly.

Pair Corralation between Long An and Elcom Technology

Assuming the 90 days trading horizon Long An Food is expected to generate 0.71 times more return on investment than Elcom Technology. However, Long An Food is 1.4 times less risky than Elcom Technology. It trades about 0.1 of its potential returns per unit of risk. Elcom Technology Communications is currently generating about 0.05 per unit of risk. If you would invest  1,410,000  in Long An Food on October 9, 2024 and sell it today you would earn a total of  410,000  from holding Long An Food or generate 29.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.7%
Values	Daily Returns

Long An Food  vs.  Elcom Technology Communication

Long An Food

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Long An Food are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Long An may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Elcom Technology Com

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Elcom Technology Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Elcom Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Long An and Elcom Technology

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

The idea behind Long An Food and Elcom Technology Communications 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.