Correlation Between ECOVE Environment and New Era
Can any of the company-specific risk be diversified away by investing in both ECOVE Environment and New Era 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 ECOVE Environment and New Era into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECOVE Environment Corp and New Era Electronics, you can compare the effects of market volatilities on ECOVE Environment and New Era 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 ECOVE Environment with a short position of New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECOVE Environment and New Era.
Diversification Opportunities for ECOVE Environment and New Era
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between ECOVE and New is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding ECOVE Environment Corp and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics and ECOVE Environment 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 ECOVE Environment Corp are associated (or correlated) with New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of ECOVE Environment i.e., ECOVE Environment and New Era go up and down completely randomly.
Pair Corralation between ECOVE Environment and New Era
Assuming the 90 days trading horizon ECOVE Environment Corp is expected to generate 0.19 times more return on investment than New Era. However, ECOVE Environment Corp is 5.31 times less risky than New Era. It trades about 0.11 of its potential returns per unit of risk. New Era Electronics is currently generating about -0.22 per unit of risk. If you would invest 28,400 in ECOVE Environment Corp on October 25, 2024 and sell it today you would earn a total of 350.00 from holding ECOVE Environment Corp or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECOVE Environment Corp vs. New Era Electronics
Performance |
| Timeline |
| ECOVE Environment Corp |
| New Era Electronics |
ECOVE Environment and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECOVE Environment and New Era
The main advantage of trading using opposite ECOVE Environment and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECOVE Environment position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| ECOVE Environment vs. Cleanaway Co | ECOVE Environment vs. Taiwan Secom Co | ECOVE Environment vs. Sunny Friend Environmental | ECOVE Environment vs. TTET Union Corp |
| New Era vs. SS Healthcare Holding | New Era vs. Xxentria Technology Materials | New Era vs. Onyx Healthcare | New Era vs. Fulin Plastic Industry |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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