Correlation Between Eagle Cold and Far EasTone
Can any of the company-specific risk be diversified away by investing in both Eagle Cold and Far EasTone 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 Eagle Cold and Far EasTone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Cold Storage and Far EasTone Telecommunications, you can compare the effects of market volatilities on Eagle Cold and Far EasTone 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 Eagle Cold with a short position of Far EasTone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Cold and Far EasTone.
Diversification Opportunities for Eagle Cold and Far EasTone
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eagle and Far is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Cold Storage and Far EasTone Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far EasTone Telecomm and Eagle Cold 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 Eagle Cold Storage are associated (or correlated) with Far EasTone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far EasTone Telecomm has no effect on the direction of Eagle Cold i.e., Eagle Cold and Far EasTone go up and down completely randomly.
Pair Corralation between Eagle Cold and Far EasTone
Assuming the 90 days trading horizon Eagle Cold Storage is expected to generate 0.88 times more return on investment than Far EasTone. However, Eagle Cold Storage is 1.14 times less risky than Far EasTone. It trades about 0.19 of its potential returns per unit of risk. Far EasTone Telecommunications is currently generating about -0.02 per unit of risk. If you would invest 3,000 in Eagle Cold Storage on November 4, 2024 and sell it today you would earn a total of 160.00 from holding Eagle Cold Storage or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Cold Storage vs. Far EasTone Telecommunications
Performance |
| Timeline |
| Eagle Cold Storage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Far EasTone Telecomm |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Eagle Cold and Far EasTone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Cold and Far EasTone
The main advantage of trading using opposite Eagle Cold and Far EasTone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Cold position performs unexpectedly, Far EasTone 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 Far EasTone will offset losses from the drop in Far EasTone's long position.The idea behind Eagle Cold Storage and Far EasTone Telecommunications 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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