Correlation Between RS Automation and Ecopro BM
Can any of the company-specific risk be diversified away by investing in both RS Automation and Ecopro BM 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 RS Automation and Ecopro BM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RS Automation CoLtd and Ecopro BM Co, you can compare the effects of market volatilities on RS Automation and Ecopro BM 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 RS Automation with a short position of Ecopro BM. Check out your portfolio center. Please also check ongoing floating volatility patterns of RS Automation and Ecopro BM.
Diversification Opportunities for RS Automation and Ecopro BM
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 140670 and Ecopro is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding RS Automation CoLtd and Ecopro BM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro BM and RS Automation 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 RS Automation CoLtd are associated (or correlated) with Ecopro BM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro BM has no effect on the direction of RS Automation i.e., RS Automation and Ecopro BM go up and down completely randomly.
Pair Corralation between RS Automation and Ecopro BM
Assuming the 90 days trading horizon RS Automation CoLtd is expected to generate 0.68 times more return on investment than Ecopro BM. However, RS Automation CoLtd is 1.46 times less risky than Ecopro BM. It trades about 0.13 of its potential returns per unit of risk. Ecopro BM Co is currently generating about -0.21 per unit of risk. If you would invest 1,041,000 in RS Automation CoLtd on September 1, 2024 and sell it today you would earn a total of 86,000 from holding RS Automation CoLtd or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RS Automation CoLtd vs. Ecopro BM Co
Performance |
| Timeline |
| RS Automation CoLtd |
| Ecopro BM |
RS Automation and Ecopro BM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RS Automation and Ecopro BM
The main advantage of trading using opposite RS Automation and Ecopro BM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RS Automation position performs unexpectedly, Ecopro BM 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 Ecopro BM will offset losses from the drop in Ecopro BM's long position.The idea behind RS Automation CoLtd and Ecopro BM Co 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.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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