Correlation Between GENERAL and Electrovaya Common

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

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

Diversification Opportunities for GENERAL and Electrovaya Common

-0.61

Correlation Coefficient

GENERAL  Electrovaya Common

Excellent diversification

The 3 months correlation between GENERAL and Electrovaya is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GENERAL ELEC CAP 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 GENERAL 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 GENERAL ELEC CAP 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 GENERAL i.e., GENERAL and Electrovaya Common go up and down completely randomly.

Pair Corralation between GENERAL and Electrovaya Common

Assuming the 90 days trading horizon GENERAL is expected to generate 18.88 times less return on investment than Electrovaya Common. But when comparing it to its historical volatility, GENERAL ELEC CAP is 5.13 times less risky than Electrovaya Common. It trades about 0.01 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  231.00  in Electrovaya Common Shares on October 11, 2024 and sell it today you would earn a total of  19.00  from holding Electrovaya Common Shares or generate 8.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.57%
Values	Daily Returns

GENERAL ELEC CAP  vs.  Electrovaya Common Shares

GENERAL ELEC CAP

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GENERAL ELEC CAP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, GENERAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Electrovaya Common Shares

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electrovaya Common Shares are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Electrovaya Common sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GENERAL and Electrovaya Common

The main advantage of trading using opposite GENERAL and Electrovaya Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GENERAL 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 GENERAL ELEC CAP 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.