Correlation Between Meiwu Technology and Electrovaya Common

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

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

Diversification Opportunities for Meiwu Technology and Electrovaya Common

0.48

Correlation Coefficient

Meiwu Technology  Electrovaya Common

Very weak diversification

The 3 months correlation between Meiwu and Electrovaya is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Meiwu Technology Co 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 Meiwu Technology 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 Meiwu Technology Co 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 Meiwu Technology i.e., Meiwu Technology and Electrovaya Common go up and down completely randomly.

Pair Corralation between Meiwu Technology and Electrovaya Common

Considering the 90-day investment horizon Meiwu Technology Co is expected to generate 0.9 times more return on investment than Electrovaya Common. However, Meiwu Technology Co is 1.11 times less risky than Electrovaya Common. It trades about 0.56 of its potential returns per unit of risk. Electrovaya Common Shares is currently generating about -0.05 per unit of risk. If you would invest  82.00  in Meiwu Technology Co on September 19, 2024 and sell it today you would earn a total of  69.00  from holding Meiwu Technology Co or generate 84.15% return on investment over 90 days.

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

Meiwu Technology Co  vs.  Electrovaya Common Shares

Meiwu Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meiwu Technology Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Meiwu Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Electrovaya Common Shares

Risk-Adjusted Performance

0 of 100

Insignificant

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Meiwu Technology and Electrovaya Common

The main advantage of trading using opposite Meiwu Technology and Electrovaya Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiwu Technology 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 Meiwu Technology Co 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.