Correlation Between ECHO INVESTMENT and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and Eagle 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 Eagle 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 Eagle Materials, you can compare the effects of market volatilities on ECHO INVESTMENT and Eagle 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 Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and Eagle Materials.
Diversification Opportunities for ECHO INVESTMENT and Eagle Materials
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ECHO and Eagle is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle 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 Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and Eagle Materials go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and Eagle Materials
Assuming the 90 days horizon ECHO INVESTMENT is expected to generate 7.03 times less return on investment than Eagle Materials. But when comparing it to its historical volatility, ECHO INVESTMENT ZY is 1.21 times less risky than Eagle Materials. It trades about 0.04 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 26,400 in Eagle Materials on September 5, 2024 and sell it today you would earn a total of 2,400 from holding Eagle Materials or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECHO INVESTMENT ZY vs. Eagle Materials
Performance |
| Timeline |
| ECHO INVESTMENT ZY |
| Eagle Materials |
ECHO INVESTMENT and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECHO INVESTMENT and Eagle Materials
The main advantage of trading using opposite ECHO INVESTMENT and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT position performs unexpectedly, Eagle 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| ECHO INVESTMENT vs. GuocoLand Limited | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. NMI Holdings | ECHO INVESTMENT vs. Origin Agritech |
| Eagle Materials vs. JD SPORTS FASH | Eagle Materials vs. ECHO INVESTMENT ZY | Eagle Materials vs. SPORTING | Eagle Materials vs. HK Electric Investments |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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