Correlation Between SR Accord and Eldav L

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

By analyzing existing cross correlation between SR Accord and Eldav L, you can compare the effects of market volatilities on SR Accord and Eldav L 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 SR Accord with a short position of Eldav L. Check out your portfolio center. Please also check ongoing floating volatility patterns of SR Accord and Eldav L.

Diversification Opportunities for SR Accord and Eldav L

-0.49

Correlation Coefficient

SR Accord  Eldav L

Very good diversification

The 3 months correlation between SRAC and Eldav is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SR Accord and Eldav L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eldav L and SR Accord 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 SR Accord are associated (or correlated) with Eldav L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eldav L has no effect on the direction of SR Accord i.e., SR Accord and Eldav L go up and down completely randomly.

Pair Corralation between SR Accord and Eldav L

Assuming the 90 days trading horizon SR Accord is expected to generate 0.97 times more return on investment than Eldav L. However, SR Accord is 1.03 times less risky than Eldav L. It trades about 0.07 of its potential returns per unit of risk. Eldav L is currently generating about 0.04 per unit of risk. If you would invest  252,195  in SR Accord on December 4, 2024 and sell it today you would earn a total of  217,105  from holding SR Accord or generate 86.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.74%
Values	Daily Returns

SR Accord  vs.  Eldav L

SR Accord

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SR Accord are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SR Accord sustained solid returns over the last few months and may actually be approaching a breakup point.

Eldav L

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eldav L are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Eldav L is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SR Accord and Eldav L

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

The idea behind SR Accord and Eldav L 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.