Correlation Between Echo Investment and APS Energia
Can any of the company-specific risk be diversified away by investing in both Echo Investment and APS Energia 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 APS Energia 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 APS Energia SA, you can compare the effects of market volatilities on Echo Investment and APS Energia 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 APS Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Investment and APS Energia.
Diversification Opportunities for Echo Investment and APS Energia
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Echo and APS is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Echo Investment SA and APS Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Energia 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 APS Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Energia SA has no effect on the direction of Echo Investment i.e., Echo Investment and APS Energia go up and down completely randomly.
Pair Corralation between Echo Investment and APS Energia
Assuming the 90 days trading horizon Echo Investment SA is expected to generate 0.43 times more return on investment than APS Energia. However, Echo Investment SA is 2.33 times less risky than APS Energia. It trades about 0.06 of its potential returns per unit of risk. APS Energia SA is currently generating about 0.01 per unit of risk. If you would invest 279.00 in Echo Investment SA on September 1, 2024 and sell it today you would earn a total of 157.00 from holding Echo Investment SA or generate 56.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Echo Investment SA vs. APS Energia SA
Performance |
| Timeline |
| Echo Investment SA |
| APS Energia SA |
Echo Investment and APS Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Echo Investment and APS Energia
The main advantage of trading using opposite Echo Investment and APS Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Investment position performs unexpectedly, APS Energia 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 APS Energia will offset losses from the drop in APS Energia's long position.| Echo Investment vs. MW Trade SA | Echo Investment vs. Quantum Software SA | Echo Investment vs. mBank SA | Echo Investment vs. GreenX Metals |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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