Correlation Between Eastern Technical and Autocorp Holding
Can any of the company-specific risk be diversified away by investing in both Eastern Technical and Autocorp Holding 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 Technical and Autocorp Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Technical Engineering and Autocorp Holding Public, you can compare the effects of market volatilities on Eastern Technical and Autocorp Holding 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 Technical with a short position of Autocorp Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Technical and Autocorp Holding.
Diversification Opportunities for Eastern Technical and Autocorp Holding
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and Autocorp is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and Autocorp Holding Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocorp Holding Public and Eastern Technical 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 Technical Engineering are associated (or correlated) with Autocorp Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autocorp Holding Public has no effect on the direction of Eastern Technical i.e., Eastern Technical and Autocorp Holding go up and down completely randomly.
Pair Corralation between Eastern Technical and Autocorp Holding
Assuming the 90 days trading horizon Eastern Technical Engineering is expected to generate 0.95 times more return on investment than Autocorp Holding. However, Eastern Technical Engineering is 1.06 times less risky than Autocorp Holding. It trades about 0.01 of its potential returns per unit of risk. Autocorp Holding Public is currently generating about -0.15 per unit of risk. If you would invest 81.00 in Eastern Technical Engineering on October 20, 2024 and sell it today you would earn a total of 0.00 from holding Eastern Technical Engineering or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Technical Engineering vs. Autocorp Holding Public
Performance |
| Timeline |
| Eastern Technical |
| Autocorp Holding Public |
Eastern Technical and Autocorp Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Technical and Autocorp Holding
The main advantage of trading using opposite Eastern Technical and Autocorp Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Technical position performs unexpectedly, Autocorp Holding 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 Autocorp Holding will offset losses from the drop in Autocorp Holding's long position.| Eastern Technical vs. G Capital Public | Eastern Technical vs. Harn Engineering Solutions | Eastern Technical vs. Hydrotek Public | Eastern Technical vs. Ama Marine Public |
| Autocorp Holding vs. Amanah Leasing Public | Autocorp Holding vs. Asia Fiber Public | Autocorp Holding vs. Ingress Industrial Public | Autocorp Holding vs. Ekarat Engineering Public |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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