Correlation Between Charles Colvard and Envela Corp

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

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

Diversification Opportunities for Charles Colvard and Envela Corp

-0.45

Correlation Coefficient

Charles Colvard  Envela Corp

Very good diversification

The 3 months correlation between Charles and Envela is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Charles Colvard and Envela Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Envela Corp and Charles Colvard 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 Charles Colvard are associated (or correlated) with Envela Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Envela Corp has no effect on the direction of Charles Colvard i.e., Charles Colvard and Envela Corp go up and down completely randomly.

Pair Corralation between Charles Colvard and Envela Corp

Given the investment horizon of 90 days Charles Colvard is expected to generate 2.76 times more return on investment than Envela Corp. However, Charles Colvard is 2.76 times more volatile than Envela Corp. It trades about 0.18 of its potential returns per unit of risk. Envela Corp is currently generating about 0.32 per unit of risk. If you would invest  136.00  in Charles Colvard on September 14, 2024 and sell it today you would earn a total of  38.00  from holding Charles Colvard or generate 27.94% return on investment over 90 days.

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

Charles Colvard  vs.  Envela Corp

Charles Colvard

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Colvard are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical indicators, Charles Colvard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Envela Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Envela Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Envela Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charles Colvard and Envela Corp

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

The idea behind Charles Colvard and Envela Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.