Correlation Between GreenTech Environmental and Eastern Communications
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By analyzing existing cross correlation between GreenTech Environmental Co and Eastern Communications Co, you can compare the effects of market volatilities on GreenTech Environmental and Eastern Communications 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 GreenTech Environmental with a short position of Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenTech Environmental and Eastern Communications.
Diversification Opportunities for GreenTech Environmental and Eastern Communications
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GreenTech and Eastern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GreenTech Environmental Co and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications and GreenTech Environmental 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 GreenTech Environmental Co are associated (or correlated) with Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of GreenTech Environmental i.e., GreenTech Environmental and Eastern Communications go up and down completely randomly.
Pair Corralation between GreenTech Environmental and Eastern Communications
Assuming the 90 days trading horizon GreenTech Environmental Co is expected to under-perform the Eastern Communications. But the stock apears to be less risky and, when comparing its historical volatility, GreenTech Environmental Co is 1.19 times less risky than Eastern Communications. The stock trades about -0.39 of its potential returns per unit of risk. The Eastern Communications Co is currently generating about -0.24 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Eastern Communications Co on October 14, 2024 and sell it today you would lose (5.00) from holding Eastern Communications Co or give up 11.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenTech Environmental Co vs. Eastern Communications Co
Performance |
| Timeline |
| GreenTech Environmental |
| Eastern Communications |
GreenTech Environmental and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenTech Environmental and Eastern Communications
The main advantage of trading using opposite GreenTech Environmental and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenTech Environmental position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.The idea behind GreenTech Environmental Co and Eastern Communications Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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