Correlation Between Associated British and Eastinco Mining
Can any of the company-specific risk be diversified away by investing in both Associated British and Eastinco Mining 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 Associated British and Eastinco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Eastinco Mining Exploration, you can compare the effects of market volatilities on Associated British and Eastinco Mining 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 Associated British with a short position of Eastinco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Eastinco Mining.
Diversification Opportunities for Associated British and Eastinco Mining
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Associated and Eastinco is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Associated British 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 Associated British Foods are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Associated British i.e., Associated British and Eastinco Mining go up and down completely randomly.
Pair Corralation between Associated British and Eastinco Mining
Assuming the 90 days trading horizon Associated British Foods is expected to under-perform the Eastinco Mining. But the stock apears to be less risky and, when comparing its historical volatility, Associated British Foods is 2.09 times less risky than Eastinco Mining. The stock trades about -0.2 of its potential returns per unit of risk. The Eastinco Mining Exploration is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,700 in Eastinco Mining Exploration on November 4, 2024 and sell it today you would earn a total of 700.00 from holding Eastinco Mining Exploration or generate 14.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Eastinco Mining Exploration
Performance |
| Timeline |
| Associated British Foods |
| Eastinco Mining Expl |
Associated British and Eastinco Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Eastinco Mining
The main advantage of trading using opposite Associated British and Eastinco Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Eastinco Mining 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 Eastinco Mining will offset losses from the drop in Eastinco Mining's long position.| Associated British vs. Silver Bullet Data | Associated British vs. Automatic Data Processing | Associated British vs. Coor Service Management | Associated British vs. Pets at Home |
| Eastinco Mining vs. Givaudan SA | Eastinco Mining vs. Antofagasta PLC | Eastinco Mining vs. Ferrexpo PLC | Eastinco Mining vs. Atalaya Mining |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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