Correlation Between Electra Battery and Gitennes Exploration

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

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

Diversification Opportunities for Electra Battery and Gitennes Exploration

0.65

Correlation Coefficient

Electra Battery  Gitennes Exploration

Poor diversification

The 3 months correlation between Electra and Gitennes is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials and Gitennes Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gitennes Exploration and Electra Battery 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 Battery Materials are associated (or correlated) with Gitennes Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gitennes Exploration has no effect on the direction of Electra Battery i.e., Electra Battery and Gitennes Exploration go up and down completely randomly.

Pair Corralation between Electra Battery and Gitennes Exploration

Assuming the 90 days trading horizon Electra Battery is expected to generate 14.12 times less return on investment than Gitennes Exploration. But when comparing it to its historical volatility, Electra Battery Materials is 15.32 times less risky than Gitennes Exploration. It trades about 0.19 of its potential returns per unit of risk. Gitennes Exploration is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Gitennes Exploration on February 27, 2024 and sell it today you would earn a total of  0.00  from holding Gitennes Exploration or generate 0.0% return on investment over 90 days.

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

Electra Battery Materials  vs.  Gitennes Exploration

Electra Battery Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Electra Battery Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Gitennes Exploration

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gitennes Exploration are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gitennes Exploration showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Electra Battery and Gitennes Exploration

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

The idea behind Electra Battery Materials and Gitennes Exploration 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.