Correlation Between Montauk Renewables and Electrovaya Common

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

By analyzing existing cross correlation between Montauk Renewables and Electrovaya Common Shares, you can compare the effects of market volatilities on Montauk Renewables and Electrovaya Common 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 Montauk Renewables with a short position of Electrovaya Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Electrovaya Common.

Diversification Opportunities for Montauk Renewables and Electrovaya Common

-0.54

Correlation Coefficient

Montauk Renewables  Electrovaya Common

Excellent diversification

The 3 months correlation between Montauk and Electrovaya is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Electrovaya Common Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electrovaya Common Shares and Montauk Renewables 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 Montauk Renewables are associated (or correlated) with Electrovaya Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electrovaya Common Shares has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Electrovaya Common go up and down completely randomly.

Pair Corralation between Montauk Renewables and Electrovaya Common

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Electrovaya Common. In addition to that, Montauk Renewables is 1.13 times more volatile than Electrovaya Common Shares. It trades about -0.02 of its total potential returns per unit of risk. Electrovaya Common Shares is currently generating about -0.01 per unit of volatility. If you would invest  427.00  in Electrovaya Common Shares on October 8, 2024 and sell it today you would lose (164.00) from holding Electrovaya Common Shares or give up 38.41% of portfolio value over 90 days.

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

Montauk Renewables  vs.  Electrovaya Common Shares

Montauk Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Montauk Renewables is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Electrovaya Common Shares

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Montauk Renewables and Electrovaya Common

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

The idea behind Montauk Renewables and Electrovaya Common Shares 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.