Correlation Between Echo Investment and MLP Group
Can any of the company-specific risk be diversified away by investing in both Echo Investment and MLP Group 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 MLP Group 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 MLP Group SA, you can compare the effects of market volatilities on Echo Investment and MLP Group 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 MLP Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Investment and MLP Group.
Diversification Opportunities for Echo Investment and MLP Group
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Echo and MLP is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Echo Investment SA and MLP Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLP Group 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 MLP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MLP Group SA has no effect on the direction of Echo Investment i.e., Echo Investment and MLP Group go up and down completely randomly.
Pair Corralation between Echo Investment and MLP Group
Assuming the 90 days trading horizon Echo Investment SA is expected to generate 0.83 times more return on investment than MLP Group. However, Echo Investment SA is 1.21 times less risky than MLP Group. It trades about 0.05 of its potential returns per unit of risk. MLP Group SA is currently generating about 0.03 per unit of risk. If you would invest 403.00 in Echo Investment SA on September 14, 2024 and sell it today you would earn a total of 82.00 from holding Echo Investment SA or generate 20.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Echo Investment SA vs. MLP Group SA
Performance |
| Timeline |
| Echo Investment SA |
| MLP Group SA |
Echo Investment and MLP Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Echo Investment and MLP Group
The main advantage of trading using opposite Echo Investment and MLP Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Investment position performs unexpectedly, MLP Group 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 MLP Group will offset losses from the drop in MLP Group's long position.| Echo Investment vs. Asseco Business Solutions | Echo Investment vs. Asseco South Eastern | Echo Investment vs. HM Inwest SA | Echo Investment vs. Movie Games SA |
| MLP Group vs. Intersport Polska SA | MLP Group vs. SOFTWARE MANSION SPOLKA | MLP Group vs. MCI Management SA | MLP Group vs. Road Studio 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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