Correlation Between ECSTELECOM and NewFlex Technology
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM and NewFlex Technology 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 ECSTELECOM and NewFlex Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and NewFlex Technology Co, you can compare the effects of market volatilities on ECSTELECOM and NewFlex Technology 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 ECSTELECOM with a short position of NewFlex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and NewFlex Technology.
Diversification Opportunities for ECSTELECOM and NewFlex Technology
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between ECSTELECOM and NewFlex is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM Co and NewFlex Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFlex Technology and ECSTELECOM 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 ECSTELECOM Co are associated (or correlated) with NewFlex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFlex Technology has no effect on the direction of ECSTELECOM i.e., ECSTELECOM and NewFlex Technology go up and down completely randomly.
Pair Corralation between ECSTELECOM and NewFlex Technology
Assuming the 90 days trading horizon ECSTELECOM Co is expected to under-perform the NewFlex Technology. But the stock apears to be less risky and, when comparing its historical volatility, ECSTELECOM Co is 3.03 times less risky than NewFlex Technology. The stock trades about -0.05 of its potential returns per unit of risk. The NewFlex Technology Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 527,000 in NewFlex Technology Co on September 4, 2024 and sell it today you would lose (60,500) from holding NewFlex Technology Co or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. NewFlex Technology Co
Performance |
| Timeline |
| ECSTELECOM |
| NewFlex Technology |
ECSTELECOM and NewFlex Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and NewFlex Technology
The main advantage of trading using opposite ECSTELECOM and NewFlex Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM position performs unexpectedly, NewFlex Technology 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 NewFlex Technology will offset losses from the drop in NewFlex Technology's long position.| ECSTELECOM vs. Sungwoo Electronics Co | ECSTELECOM vs. NH Investment Securities | ECSTELECOM vs. Lindeman Asia Investment | ECSTELECOM vs. Hanjin Transportation Co |
| NewFlex Technology vs. PJ Metal Co | NewFlex Technology vs. MetaLabs Co | NewFlex Technology vs. ECSTELECOM Co | NewFlex Technology vs. SK Telecom Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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