Correlation Between China Eastern and Ecotel Communication
Can any of the company-specific risk be diversified away by investing in both China Eastern and Ecotel Communication 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 China Eastern and Ecotel Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Eastern Airlines and ecotel communication ag, you can compare the effects of market volatilities on China Eastern and Ecotel Communication 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 China Eastern with a short position of Ecotel Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Ecotel Communication.
Diversification Opportunities for China Eastern and Ecotel Communication
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Ecotel is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and ecotel communication ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ecotel communication and China Eastern 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 China Eastern Airlines are associated (or correlated) with Ecotel Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ecotel communication has no effect on the direction of China Eastern i.e., China Eastern and Ecotel Communication go up and down completely randomly.
Pair Corralation between China Eastern and Ecotel Communication
Assuming the 90 days trading horizon China Eastern Airlines is expected to generate 2.15 times more return on investment than Ecotel Communication. However, China Eastern is 2.15 times more volatile than ecotel communication ag. It trades about 0.02 of its potential returns per unit of risk. ecotel communication ag is currently generating about 0.0 per unit of risk. If you would invest 30.00 in China Eastern Airlines on October 27, 2024 and sell it today you would earn a total of 1.00 from holding China Eastern Airlines or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Eastern Airlines vs. ecotel communication ag
Performance |
| Timeline |
| China Eastern Airlines |
| ecotel communication |
China Eastern and Ecotel Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Ecotel Communication
The main advantage of trading using opposite China Eastern and Ecotel Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Ecotel Communication 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 Ecotel Communication will offset losses from the drop in Ecotel Communication's long position.| China Eastern vs. Delta Air Lines | China Eastern vs. Air China Limited | China Eastern vs. AIR CHINA LTD | China Eastern vs. RYANAIR HLDGS ADR |
| Ecotel Communication vs. Penn National Gaming | Ecotel Communication vs. SIERRA METALS | Ecotel Communication vs. DETALION GAMES SA | Ecotel Communication vs. DISTRICT METALS |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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