Correlation Between El Mor and Levinstein Eng

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Can any of the company-specific risk be diversified away by investing in both El Mor and Levinstein Eng 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 El Mor and Levinstein Eng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Mor Electric Installation and Levinstein Eng, you can compare the effects of market volatilities on El Mor and Levinstein Eng 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 El Mor with a short position of Levinstein Eng. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Mor and Levinstein Eng.

Diversification Opportunities for El Mor and Levinstein Eng

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between ELMR and Levinstein is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding El-Mor Electric Installation and Levinstein Eng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levinstein Eng and El Mor 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 El Mor Electric Installation are associated (or correlated) with Levinstein Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levinstein Eng has no effect on the direction of El Mor i.e., El Mor and Levinstein Eng go up and down completely randomly.

Pair Corralation between El Mor and Levinstein Eng

Assuming the 90 days trading horizon El Mor is expected to generate 14.37 times less return on investment than Levinstein Eng. But when comparing it to its historical volatility, El Mor Electric Installation is 1.05 times less risky than Levinstein Eng. It trades about 0.0 of its potential returns per unit of risk. Levinstein Eng is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,119,000  in Levinstein Eng on December 29, 2023 and sell it today you would earn a total of  41,000  from holding Levinstein Eng or generate 1.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

El-Mor Electric Installation  vs.  Levinstein Eng

 Performance 
       Timeline  
El-Mor Electric Inst 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days El Mor Electric Installation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, El Mor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Levinstein Eng 

Risk-Adjusted Performance

1 of 100

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

El Mor and Levinstein Eng Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with El Mor and Levinstein Eng

The main advantage of trading using opposite El Mor and Levinstein Eng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Mor position performs unexpectedly, Levinstein Eng 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 Levinstein Eng will offset losses from the drop in Levinstein Eng's long position.
The idea behind El Mor Electric Installation and Levinstein Eng 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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