Correlation Between EJF Investments and Pressure Technologies
Can any of the company-specific risk be diversified away by investing in both EJF Investments and Pressure Technologies 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 EJF Investments and Pressure Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EJF Investments and Pressure Technologies Plc, you can compare the effects of market volatilities on EJF Investments and Pressure Technologies 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 EJF Investments with a short position of Pressure Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of EJF Investments and Pressure Technologies.
Diversification Opportunities for EJF Investments and Pressure Technologies
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EJF and Pressure is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments and Pressure Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Technologies Plc and EJF Investments 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 EJF Investments are associated (or correlated) with Pressure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Technologies Plc has no effect on the direction of EJF Investments i.e., EJF Investments and Pressure Technologies go up and down completely randomly.
Pair Corralation between EJF Investments and Pressure Technologies
Assuming the 90 days trading horizon EJF Investments is expected to generate 1.01 times more return on investment than Pressure Technologies. However, EJF Investments is 1.01 times more volatile than Pressure Technologies Plc. It trades about 0.01 of its potential returns per unit of risk. Pressure Technologies Plc is currently generating about -0.3 per unit of risk. If you would invest 12,000 in EJF Investments on October 28, 2024 and sell it today you would earn a total of 0.00 from holding EJF Investments or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EJF Investments vs. Pressure Technologies Plc
Performance |
| Timeline |
| EJF Investments |
| Pressure Technologies Plc |
EJF Investments and Pressure Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EJF Investments and Pressure Technologies
The main advantage of trading using opposite EJF Investments and Pressure Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EJF Investments position performs unexpectedly, Pressure Technologies 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 Pressure Technologies will offset losses from the drop in Pressure Technologies' long position.| EJF Investments vs. National Beverage Corp | EJF Investments vs. Associated British Foods | EJF Investments vs. Roadside Real Estate | EJF Investments vs. Molson Coors Beverage |
| Pressure Technologies vs. Take Two Interactive Software | Pressure Technologies vs. Europa Metals | Pressure Technologies vs. CNH Industrial NV | Pressure Technologies vs. Golden Metal Resources |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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