Correlation Between Echo Investment and AB SA
Can any of the company-specific risk be diversified away by investing in both Echo Investment and AB SA 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 Echo Investment and AB SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Echo Investment SA and AB SA, you can compare the effects of market volatilities on Echo Investment and AB SA 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 Echo Investment with a short position of AB SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Investment and AB SA.
Diversification Opportunities for Echo Investment and AB SA
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Echo and ABE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Echo Investment SA and AB SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB SA and Echo Investment 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 Echo Investment SA are associated (or correlated) with AB SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB SA has no effect on the direction of Echo Investment i.e., Echo Investment and AB SA go up and down completely randomly.
Pair Corralation between Echo Investment and AB SA
Assuming the 90 days trading horizon Echo Investment SA is expected to under-perform the AB SA. But the stock apears to be less risky and, when comparing its historical volatility, Echo Investment SA is 1.37 times less risky than AB SA. The stock trades about -0.09 of its potential returns per unit of risk. The AB SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,800 in AB SA on September 3, 2024 and sell it today you would earn a total of 200.00 from holding AB SA or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Echo Investment SA vs. AB SA
Performance |
| Timeline |
| Echo Investment SA |
| AB SA |
Echo Investment and AB SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Echo Investment and AB SA
The main advantage of trading using opposite Echo Investment and AB SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Investment position performs unexpectedly, AB SA 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 AB SA will offset losses from the drop in AB SA's long position.| Echo Investment vs. Asseco Business Solutions | Echo Investment vs. Detalion Games SA | Echo Investment vs. Kogeneracja SA | Echo Investment vs. Asseco South Eastern |
| AB SA vs. Globe Trade Centre | AB SA vs. New Tech Venture | AB SA vs. Kool2play SA | AB SA vs. Creotech Instruments SA |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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