Correlation Between Electrovaya Common and Flux Power

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

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

Diversification Opportunities for Electrovaya Common and Flux Power

Poor diversification

The 3 months correlation between Electrovaya and Flux is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Electrovaya Common Shares and Flux Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flux Power Holdings and Electrovaya Common 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 Electrovaya Common Shares are associated (or correlated) with Flux Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flux Power Holdings has no effect on the direction of Electrovaya Common i.e., Electrovaya Common and Flux Power go up and down completely randomly.

Pair Corralation between Electrovaya Common and Flux Power

Given the investment horizon of 90 days Electrovaya Common Shares is expected to generate 1.23 times more return on investment than Flux Power. However, Electrovaya Common is 1.23 times more volatile than Flux Power Holdings. It trades about 0.04 of its potential returns per unit of risk. Flux Power Holdings is currently generating about 0.05 per unit of risk. If you would invest  256.00  in Electrovaya Common Shares on September 2, 2023 and sell it today you would earn a total of  6.00  from holding Electrovaya Common Shares or generate 2.34% return on investment over 90 days.

Electrovaya Common Shares  vs.  Flux Power Holdings

Electrovaya Common Shares

Electrovaya Performance

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Over the last 90 days Electrovaya Common Shares has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Flux Power Holdings

Flux Performance

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Over the last 90 days Flux Power Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Electrovaya Common and Flux Power

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

The idea behind Electrovaya Common Shares and Flux Power Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.