Correlation Between Eastern Technical and Communication System
Can any of the company-specific risk be diversified away by investing in both Eastern Technical and Communication System 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 Communication System 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 Communication System Solution, you can compare the effects of market volatilities on Eastern Technical and Communication System 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 Communication System. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Technical and Communication System.
Diversification Opportunities for Eastern Technical and Communication System
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and Communication is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and Communication System Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication System 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 Communication System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication System has no effect on the direction of Eastern Technical i.e., Eastern Technical and Communication System go up and down completely randomly.
Pair Corralation between Eastern Technical and Communication System
Assuming the 90 days trading horizon Eastern Technical Engineering is expected to under-perform the Communication System. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Technical Engineering is 2.15 times less risky than Communication System. The stock trades about -0.33 of its potential returns per unit of risk. The Communication System Solution is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 87.00 in Communication System Solution on August 25, 2024 and sell it today you would earn a total of 11.00 from holding Communication System Solution or generate 12.64% 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. Communication System Solution
Performance |
| Timeline |
| Eastern Technical |
| Communication System |
Eastern Technical and Communication System Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Technical and Communication System
The main advantage of trading using opposite Eastern Technical and Communication System positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Technical position performs unexpectedly, Communication System 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 Communication System will offset losses from the drop in Communication System's long position.| Eastern Technical vs. Gunkul Engineering Public | Eastern Technical vs. The Erawan Group | Eastern Technical vs. Autocorp Holding Public | Eastern Technical vs. XSpring Capital Public |
| Communication System vs. Tata Steel Public | Communication System vs. Thaifoods Group Public | Communication System vs. TMT Steel Public | Communication System vs. The Erawan Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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