Correlation Between Electra and Rimon Consulting

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

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

Diversification Opportunities for Electra and Rimon Consulting

0.91

Correlation Coefficient

Electra  Rimon Consulting

Almost no diversification

The 3 months correlation between Electra and Rimon is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Electra and Rimon Consulting Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimon Consulting Man and Electra 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 Electra are associated (or correlated) with Rimon Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimon Consulting Man has no effect on the direction of Electra i.e., Electra and Rimon Consulting go up and down completely randomly.

Pair Corralation between Electra and Rimon Consulting

Assuming the 90 days trading horizon Electra is expected to generate 1.05 times more return on investment than Rimon Consulting. However, Electra is 1.05 times more volatile than Rimon Consulting Management. It trades about 0.68 of its potential returns per unit of risk. Rimon Consulting Management is currently generating about 0.31 per unit of risk. If you would invest  17,210,000  in Electra on September 13, 2024 and sell it today you would earn a total of  5,090,000  from holding Electra or generate 29.58% return on investment over 90 days.

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

Electra  vs.  Rimon Consulting Management

Electra

Risk-Adjusted Performance

38 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Electra are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Electra sustained solid returns over the last few months and may actually be approaching a breakup point.

Rimon Consulting Man

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rimon Consulting Management are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rimon Consulting sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electra and Rimon Consulting

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

The idea behind Electra and Rimon Consulting Management 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.