Correlation Between Eastern and Alchemy Investments
Can any of the company-specific risk be diversified away by investing in both Eastern and Alchemy Investments 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 Eastern and Alchemy Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Alchemy Investments Acquisition, you can compare the effects of market volatilities on Eastern and Alchemy Investments 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 Eastern with a short position of Alchemy Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Alchemy Investments.
Diversification Opportunities for Eastern and Alchemy Investments
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eastern and Alchemy is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Alchemy Investments Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchemy Investments and Eastern 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 Eastern Co are associated (or correlated) with Alchemy Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchemy Investments has no effect on the direction of Eastern i.e., Eastern and Alchemy Investments go up and down completely randomly.
Pair Corralation between Eastern and Alchemy Investments
Considering the 90-day investment horizon Eastern Co is expected to under-perform the Alchemy Investments. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 1.07 times less risky than Alchemy Investments. The stock trades about -0.21 of its potential returns per unit of risk. The Alchemy Investments Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,090 in Alchemy Investments Acquisition on August 27, 2024 and sell it today you would earn a total of 20.00 from holding Alchemy Investments Acquisition or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Alchemy Investments Acquisitio
Performance |
| Timeline |
| Eastern |
| Alchemy Investments |
Eastern and Alchemy Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Alchemy Investments
The main advantage of trading using opposite Eastern and Alchemy Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, Alchemy Investments 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 Alchemy Investments will offset losses from the drop in Alchemy Investments' long position.The idea behind Eastern Co and Alchemy Investments Acquisition 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.| Alchemy Investments vs. Weibo Corp | Alchemy Investments vs. National CineMedia | Alchemy Investments vs. Guangdong Investment Limited | Alchemy Investments vs. Zedge Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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