Correlation Between Elastron and Wool Industry

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

By analyzing existing cross correlation between Elastron SA and Wool Industry Tria, you can compare the effects of market volatilities on Elastron and Wool Industry 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 Elastron with a short position of Wool Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elastron and Wool Industry.

Diversification Opportunities for Elastron and Wool Industry

0.76

Correlation Coefficient

Elastron  Wool Industry

Poor diversification

The 3 months correlation between Elastron and Wool is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Elastron SA and Wool Industry Tria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wool Industry Tria and Elastron 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 Elastron SA are associated (or correlated) with Wool Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wool Industry Tria has no effect on the direction of Elastron i.e., Elastron and Wool Industry go up and down completely randomly.

Pair Corralation between Elastron and Wool Industry

Assuming the 90 days trading horizon Elastron is expected to generate 3.44 times less return on investment than Wool Industry. But when comparing it to its historical volatility, Elastron SA is 2.78 times less risky than Wool Industry. It trades about 0.12 of its potential returns per unit of risk. Wool Industry Tria is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  500.00  in Wool Industry Tria on April 23, 2025 and sell it today you would earn a total of  265.00  from holding Wool Industry Tria or generate 53.0% return on investment over 90 days.

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

Elastron SA   vs.  Wool Industry Tria

Elastron SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elastron SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Elastron sustained solid returns over the last few months and may actually be approaching a breakup point.

Wool Industry Tria

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wool Industry Tria are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wool Industry unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elastron and Wool Industry

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

The idea behind Elastron SA and Wool Industry Tria 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.