Correlation Between Echo Investment and Pepco Group
Can any of the company-specific risk be diversified away by investing in both Echo Investment and Pepco 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 Pepco 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 Pepco Group BV, you can compare the effects of market volatilities on Echo Investment and Pepco 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 Pepco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Echo Investment and Pepco Group.
Diversification Opportunities for Echo Investment and Pepco Group
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Echo and Pepco is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Echo Investment SA and Pepco Group BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pepco Group BV 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 Pepco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pepco Group BV has no effect on the direction of Echo Investment i.e., Echo Investment and Pepco Group go up and down completely randomly.
Pair Corralation between Echo Investment and Pepco Group
Assuming the 90 days trading horizon Echo Investment SA is expected to generate 0.71 times more return on investment than Pepco Group. However, Echo Investment SA is 1.4 times less risky than Pepco Group. It trades about 0.02 of its potential returns per unit of risk. Pepco Group BV is currently generating about -0.06 per unit of risk. If you would invest 420.00 in Echo Investment SA on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Echo Investment SA or generate 3.81% 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. Pepco Group BV
Performance |
| Timeline |
| Echo Investment SA |
| Pepco Group BV |
Echo Investment and Pepco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Echo Investment and Pepco Group
The main advantage of trading using opposite Echo Investment and Pepco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Echo Investment position performs unexpectedly, Pepco 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 Pepco Group will offset losses from the drop in Pepco Group's long position.| Echo Investment vs. Asseco Business Solutions | Echo Investment vs. Detalion Games SA | Echo Investment vs. Asseco South Eastern | Echo Investment vs. CFI Holding SA |
| Pepco Group vs. Echo Investment SA | Pepco Group vs. Esotiq Henderson SA | Pepco Group vs. Asseco South Eastern | Pepco Group vs. Vercom 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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