Correlation Between Ecopro BM and Amogreentech CoLtd
Can any of the company-specific risk be diversified away by investing in both Ecopro BM and Amogreentech CoLtd 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 Ecopro BM and Amogreentech CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopro BM Co and Amogreentech CoLtd, you can compare the effects of market volatilities on Ecopro BM and Amogreentech CoLtd 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 Ecopro BM with a short position of Amogreentech CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopro BM and Amogreentech CoLtd.
Diversification Opportunities for Ecopro BM and Amogreentech CoLtd
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecopro and Amogreentech is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ecopro BM Co and Amogreentech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amogreentech CoLtd and Ecopro BM 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 Ecopro BM Co are associated (or correlated) with Amogreentech CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amogreentech CoLtd has no effect on the direction of Ecopro BM i.e., Ecopro BM and Amogreentech CoLtd go up and down completely randomly.
Pair Corralation between Ecopro BM and Amogreentech CoLtd
Assuming the 90 days trading horizon Ecopro BM Co is expected to under-perform the Amogreentech CoLtd. In addition to that, Ecopro BM is 1.04 times more volatile than Amogreentech CoLtd. It trades about -0.1 of its total potential returns per unit of risk. Amogreentech CoLtd is currently generating about -0.07 per unit of volatility. If you would invest 1,000,000 in Amogreentech CoLtd on September 18, 2024 and sell it today you would lose (390,000) from holding Amogreentech CoLtd or give up 39.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopro BM Co vs. Amogreentech CoLtd
Performance |
| Timeline |
| Ecopro BM |
| Amogreentech CoLtd |
Ecopro BM and Amogreentech CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopro BM and Amogreentech CoLtd
The main advantage of trading using opposite Ecopro BM and Amogreentech CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopro BM position performs unexpectedly, Amogreentech CoLtd 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 Amogreentech CoLtd will offset losses from the drop in Amogreentech CoLtd's long position.| Ecopro BM vs. Sangsin Energy Display | Ecopro BM vs. Solution Advanced Technology | Ecopro BM vs. Busan Industrial Co | Ecopro BM vs. Busan Ind |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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