Correlation Between EQ Resources and Collins Foods
Can any of the company-specific risk be diversified away by investing in both EQ Resources and Collins Foods 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 EQ Resources and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQ Resources and Collins Foods, you can compare the effects of market volatilities on EQ Resources and Collins Foods 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 EQ Resources with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Resources and Collins Foods.
Diversification Opportunities for EQ Resources and Collins Foods
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EQR and Collins is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding EQ Resources and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and EQ Resources 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 EQ Resources are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of EQ Resources i.e., EQ Resources and Collins Foods go up and down completely randomly.
Pair Corralation between EQ Resources and Collins Foods
Assuming the 90 days trading horizon EQ Resources is expected to under-perform the Collins Foods. In addition to that, EQ Resources is 3.09 times more volatile than Collins Foods. It trades about -0.04 of its total potential returns per unit of risk. Collins Foods is currently generating about -0.05 per unit of volatility. If you would invest 859.00 in Collins Foods on November 3, 2024 and sell it today you would lose (105.00) from holding Collins Foods or give up 12.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQ Resources vs. Collins Foods
Performance |
| Timeline |
| EQ Resources |
| Collins Foods |
EQ Resources and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ Resources and Collins Foods
The main advantage of trading using opposite EQ Resources and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ Resources position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| EQ Resources vs. Ainsworth Game Technology | EQ Resources vs. Australian Strategic Materials | EQ Resources vs. Ambertech | EQ Resources vs. Technology One |
| Collins Foods vs. Aneka Tambang Tbk | Collins Foods vs. Macquarie Group | Collins Foods vs. Macquarie Group Ltd | Collins Foods vs. Challenger |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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