Correlation Between Eagle Materials and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and CHINA EDUCATION 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 Materials and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Eagle Materials and CHINA EDUCATION 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 Materials with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and CHINA EDUCATION.
Diversification Opportunities for Eagle Materials and CHINA EDUCATION
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eagle and CHINA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Eagle Materials 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 Materials are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Eagle Materials i.e., Eagle Materials and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Eagle Materials and CHINA EDUCATION
Assuming the 90 days horizon Eagle Materials is expected to generate 1.34 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, Eagle Materials is 2.34 times less risky than CHINA EDUCATION. It trades about 0.07 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 31.00 in CHINA EDUCATION GROUP on September 12, 2024 and sell it today you would earn a total of 13.00 from holding CHINA EDUCATION GROUP or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Eagle Materials |
| CHINA EDUCATION GROUP |
Eagle Materials and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and CHINA EDUCATION
The main advantage of trading using opposite Eagle Materials and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Heidelberg Materials AG | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings |
| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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