Correlation Between Eastern Star and SC Asset
Can any of the company-specific risk be diversified away by investing in both Eastern Star and SC Asset 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 Star and SC Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Star Real and SC Asset, you can compare the effects of market volatilities on Eastern Star and SC Asset 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 Star with a short position of SC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Star and SC Asset.
Diversification Opportunities for Eastern Star and SC Asset
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and SC Asset is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Star Real and SC Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SC Asset and Eastern Star 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 Star Real are associated (or correlated) with SC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SC Asset has no effect on the direction of Eastern Star i.e., Eastern Star and SC Asset go up and down completely randomly.
Pair Corralation between Eastern Star and SC Asset
Assuming the 90 days trading horizon Eastern Star Real is expected to under-perform the SC Asset. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Star Real is 1.02 times less risky than SC Asset. The stock trades about -0.12 of its potential returns per unit of risk. The SC Asset is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 266.00 in SC Asset on November 27, 2024 and sell it today you would lose (4.00) from holding SC Asset or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Star Real vs. SC Asset
Performance |
| Timeline |
| Eastern Star Real |
| SC Asset |
Eastern Star and SC Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Star and SC Asset
The main advantage of trading using opposite Eastern Star and SC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Star position performs unexpectedly, SC Asset 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 SC Asset will offset losses from the drop in SC Asset's long position.| Eastern Star vs. Land and Houses | Eastern Star vs. AP Public | Eastern Star vs. Lalin Property Public | Eastern Star vs. Quality Houses Public |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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