Correlation Between Earth Tech and SAF Special
Can any of the company-specific risk be diversified away by investing in both Earth Tech and SAF Special 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 Earth Tech and SAF Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Earth Tech Environment and SAF Special Steel, you can compare the effects of market volatilities on Earth Tech and SAF Special 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 Earth Tech with a short position of SAF Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earth Tech and SAF Special.
Diversification Opportunities for Earth Tech and SAF Special
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Earth and SAF is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Earth Tech Environment and SAF Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAF Special Steel and Earth Tech 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 Earth Tech Environment are associated (or correlated) with SAF Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAF Special Steel has no effect on the direction of Earth Tech i.e., Earth Tech and SAF Special go up and down completely randomly.
Pair Corralation between Earth Tech and SAF Special
Assuming the 90 days trading horizon Earth Tech Environment is expected to generate 12.92 times more return on investment than SAF Special. However, Earth Tech is 12.92 times more volatile than SAF Special Steel. It trades about 0.04 of its potential returns per unit of risk. SAF Special Steel is currently generating about -0.08 per unit of risk. If you would invest 392.00 in Earth Tech Environment on September 14, 2024 and sell it today you would lose (198.00) from holding Earth Tech Environment or give up 50.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.46% |
| Values | Daily Returns |
Earth Tech Environment vs. SAF Special Steel
Performance |
| Timeline |
| Earth Tech Environment |
| SAF Special Steel |
Earth Tech and SAF Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Earth Tech and SAF Special
The main advantage of trading using opposite Earth Tech and SAF Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Earth Tech position performs unexpectedly, SAF Special 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 SAF Special will offset losses from the drop in SAF Special's long position.| Earth Tech vs. Gulf Energy Development | Earth Tech vs. Energy Absolute Public | Earth Tech vs. Gunkul Engineering Public | Earth Tech vs. Global Power Synergy |
| SAF Special vs. Ratchthani Leasing Public | SAF Special vs. LH Hotel Leasehold | SAF Special vs. BA Airport Leasehold | SAF Special vs. KTBST Mixed Leasehold |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |