Correlation Between Echo Investment and New Tech
Can any of the company-specific risk be diversified away by investing in both Echo Investment and New Tech 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 New Tech 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 New Tech Venture, you can compare the effects of market volatilities on Echo Investment and New Tech 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 New Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Investment and New Tech.
Diversification Opportunities for Echo Investment and New Tech
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Echo and New is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Echo Investment SA and New Tech Venture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Tech Venture 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 New Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Tech Venture has no effect on the direction of Echo Investment i.e., Echo Investment and New Tech go up and down completely randomly.
Pair Corralation between Echo Investment and New Tech
Assuming the 90 days trading horizon Echo Investment SA is expected to under-perform the New Tech. But the stock apears to be less risky and, when comparing its historical volatility, Echo Investment SA is 1.8 times less risky than New Tech. The stock trades about -0.09 of its potential returns per unit of risk. The New Tech Venture is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 11.00 in New Tech Venture on October 25, 2024 and sell it today you would earn a total of 1.00 from holding New Tech Venture or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 87.5% |
| Values | Daily Returns |
Echo Investment SA vs. New Tech Venture
Performance |
| Timeline |
| Echo Investment SA |
| New Tech Venture |
Echo Investment and New Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Echo Investment and New Tech
The main advantage of trading using opposite Echo Investment and New Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Investment position performs unexpectedly, New Tech 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 New Tech will offset losses from the drop in New Tech's long position.| Echo Investment vs. GreenX Metals | Echo Investment vs. Santander Bank Polska | Echo Investment vs. Play2Chill SA | Echo Investment vs. Igoria Trade SA |
| New Tech vs. UF Games SA | New Tech vs. TEN SQUARE GAMES | New Tech vs. Gamedust SA | New Tech vs. Cloud Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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