Correlation Between Eastern Communications and Malion New
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By analyzing existing cross correlation between Eastern Communications Co and Malion New Materials, you can compare the effects of market volatilities on Eastern Communications and Malion New 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 Eastern Communications with a short position of Malion New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and Malion New.
Diversification Opportunities for Eastern Communications and Malion New
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eastern and Malion is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and Malion New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malion New Materials and Eastern Communications 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 Eastern Communications Co are associated (or correlated) with Malion New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malion New Materials has no effect on the direction of Eastern Communications i.e., Eastern Communications and Malion New go up and down completely randomly.
Pair Corralation between Eastern Communications and Malion New
Assuming the 90 days trading horizon Eastern Communications Co is expected to under-perform the Malion New. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Communications Co is 1.52 times less risky than Malion New. The stock trades about -0.03 of its potential returns per unit of risk. The Malion New Materials is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 840.00 in Malion New Materials on August 27, 2024 and sell it today you would lose (20.00) from holding Malion New Materials or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Communications Co vs. Malion New Materials
Performance |
| Timeline |
| Eastern Communications |
| Malion New Materials |
Eastern Communications and Malion New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Communications and Malion New
The main advantage of trading using opposite Eastern Communications and Malion New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications position performs unexpectedly, Malion New 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 Malion New will offset losses from the drop in Malion New's long position.The idea behind Eastern Communications Co and Malion New Materials 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.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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