Correlation Between Eternal Materials and Double Bond
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Double Bond 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 Eternal Materials and Double Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Double Bond Chemical, you can compare the effects of market volatilities on Eternal Materials and Double Bond 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 Eternal Materials with a short position of Double Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Double Bond.
Diversification Opportunities for Eternal Materials and Double Bond
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eternal and Double is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Double Bond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Bond Chemical and Eternal Materials 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 Eternal Materials Co are associated (or correlated) with Double Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Bond Chemical has no effect on the direction of Eternal Materials i.e., Eternal Materials and Double Bond go up and down completely randomly.
Pair Corralation between Eternal Materials and Double Bond
Assuming the 90 days trading horizon Eternal Materials is expected to generate 20.73 times less return on investment than Double Bond. In addition to that, Eternal Materials is 1.15 times more volatile than Double Bond Chemical. It trades about 0.01 of its total potential returns per unit of risk. Double Bond Chemical is currently generating about 0.33 per unit of volatility. If you would invest 4,485 in Double Bond Chemical on October 28, 2024 and sell it today you would earn a total of 265.00 from holding Double Bond Chemical or generate 5.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternal Materials Co vs. Double Bond Chemical
Performance |
| Timeline |
| Eternal Materials |
| Double Bond Chemical |
Eternal Materials and Double Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Double Bond
The main advantage of trading using opposite Eternal Materials and Double Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Double Bond 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 Double Bond will offset losses from the drop in Double Bond's long position.| Eternal Materials vs. Taiwan Fertilizer Co | Eternal Materials vs. Nan Ya Plastics | Eternal Materials vs. Formosa Chemicals Fibre | Eternal Materials vs. Far Eastern New |
| Double Bond vs. Nan Ya Plastics | Double Bond vs. China Petrochemical Development | Double Bond vs. Eternal Materials Co | Double Bond vs. TSRC Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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