Correlation Between ECHO INVESTMENT and Applied Materials
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and Applied Materials 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 ECHO INVESTMENT and Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECHO INVESTMENT ZY and Applied Materials, you can compare the effects of market volatilities on ECHO INVESTMENT and Applied Materials 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 ECHO INVESTMENT with a short position of Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and Applied Materials.
Diversification Opportunities for ECHO INVESTMENT and Applied Materials
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between ECHO and Applied is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and Applied Materials go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and Applied Materials
Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 0.77 times more return on investment than Applied Materials. However, ECHO INVESTMENT ZY is 1.29 times less risky than Applied Materials. It trades about -0.01 of its potential returns per unit of risk. Applied Materials is currently generating about -0.02 per unit of risk. If you would invest 106.00 in ECHO INVESTMENT ZY on August 31, 2024 and sell it today you would lose (6.00) from holding ECHO INVESTMENT ZY or give up 5.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
ECHO INVESTMENT ZY vs. Applied Materials
Performance |
| Timeline |
| ECHO INVESTMENT ZY |
| Applied Materials |
ECHO INVESTMENT and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECHO INVESTMENT and Applied Materials
The main advantage of trading using opposite ECHO INVESTMENT and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| ECHO INVESTMENT vs. OPEN HOUSE GROUP | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. NMI Holdings | ECHO INVESTMENT vs. Origin Agritech |
| Applied Materials vs. ASML Holding NV | Applied Materials vs. Superior Plus Corp | Applied Materials vs. NMI Holdings | Applied Materials vs. Origin Agritech |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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