Correlation Between Eastern Technical and Premier Technology
Can any of the company-specific risk be diversified away by investing in both Eastern Technical and Premier Technology 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 Premier Technology 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 Premier Technology Public, you can compare the effects of market volatilities on Eastern Technical and Premier Technology 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 Premier Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Technical and Premier Technology.
Diversification Opportunities for Eastern Technical and Premier Technology
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eastern and Premier is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and Premier Technology Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Technology 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 Premier Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Technology Public has no effect on the direction of Eastern Technical i.e., Eastern Technical and Premier Technology go up and down completely randomly.
Pair Corralation between Eastern Technical and Premier Technology
Assuming the 90 days trading horizon Eastern Technical Engineering is expected to under-perform the Premier Technology. In addition to that, Eastern Technical is 2.26 times more volatile than Premier Technology Public. It trades about -0.36 of its total potential returns per unit of risk. Premier Technology Public is currently generating about 0.09 per unit of volatility. If you would invest 955.00 in Premier Technology Public on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Premier Technology Public or generate 1.57% 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. Premier Technology Public
Performance |
| Timeline |
| Eastern Technical |
| Premier Technology Public |
Eastern Technical and Premier Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Technical and Premier Technology
The main advantage of trading using opposite Eastern Technical and Premier Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Technical position performs unexpectedly, Premier Technology 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 Premier Technology will offset losses from the drop in Premier Technology's long position.| Eastern Technical vs. G Capital Public | Eastern Technical vs. Harn Engineering Solutions | Eastern Technical vs. Fortune Parts Industry | Eastern Technical vs. Hydrotek Public |
| Premier Technology vs. Thanachart Capital Public | Premier Technology vs. Quality Houses Public | Premier Technology vs. Tipco Asphalt Public | Premier Technology vs. Synnex 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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