Correlation Between Dynasil and Electro Sensors

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

Diversification Opportunities for Dynasil and Electro Sensors

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Dynasil and Electro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dynasil Of and Electro-Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electro-Sensors and Dynasil 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 Dynasil are associated (or correlated) with Electro Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electro-Sensors has no effect on the direction of Dynasil i.e., Dynasil and Electro Sensors go up and down completely randomly.

Pair Corralation between Dynasil and Electro Sensors

Given the investment horizon of 90 days Dynasil is expected to generate 0.34 times more return on investment than Electro Sensors. However, Dynasil is 2.91 times less risky than Electro Sensors. It trades about 0.03 of its potential returns per unit of risk. Electro Sensors is currently generating about -0.02 per unit of risk. If you would invest  248.00  in Dynasil on December 20, 2023 and sell it today you would earn a total of  2.00  from holding Dynasil or generate 0.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy15.64%
ValuesDaily Returns

Dynasil Of  vs.  Electro-Sensors

 Performance 
       Timeline  
Dynasil 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Dynasil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Dynasil is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Electro-Sensors 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Electro Sensors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Electro Sensors may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Dynasil and Electro Sensors Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dynasil and Electro Sensors

The main advantage of trading using opposite Dynasil and Electro Sensors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynasil position performs unexpectedly, Electro Sensors 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 Electro Sensors will offset losses from the drop in Electro Sensors' long position.
The idea behind Dynasil and Electro Sensors 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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