Correlation Between Eastern Communications and Great Sun
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By analyzing existing cross correlation between Eastern Communications Co and Great Sun Foods Co, you can compare the effects of market volatilities on Eastern Communications and Great Sun 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 Great Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and Great Sun.
Diversification Opportunities for Eastern Communications and Great Sun
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eastern and Great is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods 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 Great Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of Eastern Communications i.e., Eastern Communications and Great Sun go up and down completely randomly.
Pair Corralation between Eastern Communications and Great Sun
Assuming the 90 days trading horizon Eastern Communications Co is expected to under-perform the Great Sun. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Communications Co is 1.22 times less risky than Great Sun. The stock trades about -0.04 of its potential returns per unit of risk. The Great Sun Foods Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 526.00 in Great Sun Foods Co on September 12, 2024 and sell it today you would lose (10.00) from holding Great Sun Foods Co or give up 1.9% 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. Great Sun Foods Co
Performance |
| Timeline |
| Eastern Communications |
| Great Sun Foods |
Eastern Communications and Great Sun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Communications and Great Sun
The main advantage of trading using opposite Eastern Communications and Great Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications position performs unexpectedly, Great Sun 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 Great Sun will offset losses from the drop in Great Sun's long position.The idea behind Eastern Communications Co and Great Sun Foods 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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