Correlation Between Skechers USA and Electrovaya Common

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

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

Diversification Opportunities for Skechers USA and Electrovaya Common

0.27

Correlation Coefficient

Skechers USA  Electrovaya Common

Modest diversification

The 3 months correlation between Skechers and Electrovaya is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Skechers USA 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 Skechers USA 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 Skechers USA 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 Skechers USA i.e., Skechers USA and Electrovaya Common go up and down completely randomly.

Pair Corralation between Skechers USA and Electrovaya Common

Considering the 90-day investment horizon Skechers USA is expected to under-perform the Electrovaya Common. But the stock apears to be less risky and, when comparing its historical volatility, Skechers USA is 1.34 times less risky than Electrovaya Common. The stock trades about -0.09 of its potential returns per unit of risk. The Electrovaya Common Shares is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  254.00  in Electrovaya Common Shares on December 30, 2024 and sell it today you would lose (16.00) from holding Electrovaya Common Shares or give up 6.3% of portfolio value over 90 days.

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

Skechers USA  vs.  Electrovaya Common Shares

Skechers USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Skechers USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Electrovaya Common Shares

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Electrovaya Common is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Skechers USA and Electrovaya Common

The main advantage of trading using opposite Skechers USA and Electrovaya Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skechers USA 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 Skechers USA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.