Correlation Between Anderson Industrial and Eastern Media
Can any of the company-specific risk be diversified away by investing in both Anderson Industrial and Eastern Media 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 Anderson Industrial and Eastern Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anderson Industrial Corp and Eastern Media International, you can compare the effects of market volatilities on Anderson Industrial and Eastern Media 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 Anderson Industrial with a short position of Eastern Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anderson Industrial and Eastern Media.
Diversification Opportunities for Anderson Industrial and Eastern Media
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Anderson and Eastern is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Anderson Industrial Corp and Eastern Media International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Media Intern and Anderson 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 Anderson Industrial Corp are associated (or correlated) with Eastern Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Media Intern has no effect on the direction of Anderson Industrial i.e., Anderson Industrial and Eastern Media go up and down completely randomly.
Pair Corralation between Anderson Industrial and Eastern Media
Assuming the 90 days trading horizon Anderson Industrial Corp is expected to under-perform the Eastern Media. In addition to that, Anderson Industrial is 1.44 times more volatile than Eastern Media International. It trades about -0.29 of its total potential returns per unit of risk. Eastern Media International is currently generating about 0.06 per unit of volatility. If you would invest 1,675 in Eastern Media International on November 5, 2024 and sell it today you would earn a total of 15.00 from holding Eastern Media International or generate 0.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anderson Industrial Corp vs. Eastern Media International
Performance |
| Timeline |
| Anderson Industrial Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Eastern Media Intern |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Anderson Industrial and Eastern Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anderson Industrial and Eastern Media
The main advantage of trading using opposite Anderson Industrial and Eastern Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anderson Industrial position performs unexpectedly, Eastern Media 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 Eastern Media will offset losses from the drop in Eastern Media's long position.The idea behind Anderson Industrial Corp and Eastern Media International 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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