Correlation Between Eshallgo and Cabot
Can any of the company-specific risk be diversified away by investing in both Eshallgo and Cabot 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 Eshallgo and Cabot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eshallgo Class A and Cabot, you can compare the effects of market volatilities on Eshallgo and Cabot 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 Eshallgo with a short position of Cabot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eshallgo and Cabot.
Diversification Opportunities for Eshallgo and Cabot
Poor diversification
The 3 months correlation between Eshallgo and Cabot is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Eshallgo Class A and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Eshallgo 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 Eshallgo Class A are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Eshallgo i.e., Eshallgo and Cabot go up and down completely randomly.
Pair Corralation between Eshallgo and Cabot
Given the investment horizon of 90 days Eshallgo Class A is expected to generate 2.73 times more return on investment than Cabot. However, Eshallgo is 2.73 times more volatile than Cabot. It trades about 0.03 of its potential returns per unit of risk. Cabot is currently generating about -0.18 per unit of risk. If you would invest 109.00 in Eshallgo Class A on November 18, 2024 and sell it today you would earn a total of 1.00 from holding Eshallgo Class A or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eshallgo Class A vs. Cabot
Performance |
| Timeline |
| Eshallgo Class A |
| Cabot |
Eshallgo and Cabot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eshallgo and Cabot
The main advantage of trading using opposite Eshallgo and Cabot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eshallgo position performs unexpectedly, Cabot 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 Cabot will offset losses from the drop in Cabot's long position.The idea behind Eshallgo Class A and Cabot 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.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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