Correlation Between EBay and SAIHEAT
Can any of the company-specific risk be diversified away by investing in both EBay and SAIHEAT 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 EBay and SAIHEAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eBay Inc and SAIHEAT Limited, you can compare the effects of market volatilities on EBay and SAIHEAT 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 EBay with a short position of SAIHEAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBay and SAIHEAT.
Diversification Opportunities for EBay and SAIHEAT
Very good diversification
The 3 months correlation between EBay and SAIHEAT is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding eBay Inc and SAIHEAT Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAIHEAT Limited and EBay 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 eBay Inc are associated (or correlated) with SAIHEAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAIHEAT Limited has no effect on the direction of EBay i.e., EBay and SAIHEAT go up and down completely randomly.
Pair Corralation between EBay and SAIHEAT
Given the investment horizon of 90 days eBay Inc is expected to generate 0.14 times more return on investment than SAIHEAT. However, eBay Inc is 7.21 times less risky than SAIHEAT. It trades about 0.08 of its potential returns per unit of risk. SAIHEAT Limited is currently generating about -0.03 per unit of risk. If you would invest 6,299 in eBay Inc on August 28, 2024 and sell it today you would earn a total of 210.00 from holding eBay Inc or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.45% |
| Values | Daily Returns |
eBay Inc vs. SAIHEAT Limited
Performance |
| Timeline |
| eBay Inc |
| SAIHEAT Limited |
EBay and SAIHEAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBay and SAIHEAT
The main advantage of trading using opposite EBay and SAIHEAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBay position performs unexpectedly, SAIHEAT 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 SAIHEAT will offset losses from the drop in SAIHEAT's long position.The idea behind eBay Inc and SAIHEAT Limited 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.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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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