Correlation Between EGain and Creative Realities

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Can any of the company-specific risk be diversified away by investing in both EGain and Creative Realities 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 EGain and Creative Realities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eGain and Creative Realities, you can compare the effects of market volatilities on EGain and Creative Realities 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 EGain with a short position of Creative Realities. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGain and Creative Realities.

Diversification Opportunities for EGain and Creative Realities

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between EGain and Creative is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding eGain and Creative Realities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Realities and EGain 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 eGain are associated (or correlated) with Creative Realities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Realities has no effect on the direction of EGain i.e., EGain and Creative Realities go up and down completely randomly.

Pair Corralation between EGain and Creative Realities

Given the investment horizon of 90 days eGain is expected to generate 0.99 times more return on investment than Creative Realities. However, eGain is 1.01 times less risky than Creative Realities. It trades about 0.01 of its potential returns per unit of risk. Creative Realities is currently generating about -0.12 per unit of risk. If you would invest  662.00  in eGain on November 2, 2024 and sell it today you would lose (40.00) from holding eGain or give up 6.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

eGain  vs.  Creative Realities

 Performance 
       Timeline  
eGain 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in eGain are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, EGain displayed solid returns over the last few months and may actually be approaching a breakup point.
Creative Realities 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Creative Realities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

EGain and Creative Realities Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EGain and Creative Realities

The main advantage of trading using opposite EGain and Creative Realities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGain position performs unexpectedly, Creative Realities 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 Creative Realities will offset losses from the drop in Creative Realities' long position.
The idea behind eGain and Creative Realities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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