Correlation Between Eagon Industrial and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Eagon Industrial and Daiyang Metal 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 Eagon Industrial and Daiyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagon Industrial Co and Daiyang Metal Co, you can compare the effects of market volatilities on Eagon Industrial and Daiyang Metal 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 Eagon Industrial with a short position of Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagon Industrial and Daiyang Metal.
Diversification Opportunities for Eagon Industrial and Daiyang Metal
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagon and Daiyang is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial Co and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal and Eagon Industrial 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 Eagon Industrial Co are associated (or correlated) with Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Eagon Industrial i.e., Eagon Industrial and Daiyang Metal go up and down completely randomly.
Pair Corralation between Eagon Industrial and Daiyang Metal
Assuming the 90 days trading horizon Eagon Industrial Co is expected to generate 0.23 times more return on investment than Daiyang Metal. However, Eagon Industrial Co is 4.28 times less risky than Daiyang Metal. It trades about -0.09 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about -0.2 per unit of risk. If you would invest 501,000 in Eagon Industrial Co on August 29, 2024 and sell it today you would lose (7,500) from holding Eagon Industrial Co or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eagon Industrial Co vs. Daiyang Metal Co
Performance |
| Timeline |
| Eagon Industrial |
| Daiyang Metal |
Eagon Industrial and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagon Industrial and Daiyang Metal
The main advantage of trading using opposite Eagon Industrial and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagon Industrial position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Eagon Industrial vs. AptaBio Therapeutics | Eagon Industrial vs. Daewoo SBI SPAC | Eagon Industrial vs. Dream Security co | Eagon Industrial vs. Microfriend |
| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Daewoo SBI SPAC | Daiyang Metal vs. Dream Security co | Daiyang Metal vs. Microfriend |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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