Correlation Between Ecopro BM and RS Automation
Can any of the company-specific risk be diversified away by investing in both Ecopro BM and RS Automation 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 RS Automation 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 RS Automation CoLtd, you can compare the effects of market volatilities on Ecopro BM and RS Automation 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 RS Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopro BM and RS Automation.
Diversification Opportunities for Ecopro BM and RS Automation
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecopro and 140670 is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ecopro BM Co and RS Automation CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RS Automation 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 RS Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RS Automation CoLtd has no effect on the direction of Ecopro BM i.e., Ecopro BM and RS Automation go up and down completely randomly.
Pair Corralation between Ecopro BM and RS Automation
Assuming the 90 days trading horizon Ecopro BM Co is expected to under-perform the RS Automation. In addition to that, Ecopro BM is 1.46 times more volatile than RS Automation CoLtd. It trades about -0.21 of its total potential returns per unit of risk. RS Automation CoLtd is currently generating about 0.13 per unit of volatility. 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 |
Ecopro BM Co vs. RS Automation CoLtd
Performance |
| Timeline |
| Ecopro BM |
| RS Automation CoLtd |
Ecopro BM and RS Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopro BM and RS Automation
The main advantage of trading using opposite Ecopro BM and RS Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopro BM position performs unexpectedly, RS Automation 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 RS Automation will offset losses from the drop in RS Automation's long position.The idea behind Ecopro BM Co and RS Automation CoLtd 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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