Correlation Between Eugene Technology and ECSTELECOM

Can any of the company-specific risk be diversified away by investing in both Eugene Technology and ECSTELECOM 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 Eugene Technology and ECSTELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eugene Technology CoLtd and ECSTELECOM Co, you can compare the effects of market volatilities on Eugene Technology and ECSTELECOM 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 Eugene Technology with a short position of ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eugene Technology and ECSTELECOM.

Diversification Opportunities for Eugene Technology and ECSTELECOM

0.47

Correlation Coefficient

Eugene Technology  ECSTELECOM

Very weak diversification

The 3 months correlation between Eugene and ECSTELECOM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM and Eugene Technology 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 Eugene Technology CoLtd are associated (or correlated) with ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of Eugene Technology i.e., Eugene Technology and ECSTELECOM go up and down completely randomly.

Pair Corralation between Eugene Technology and ECSTELECOM

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to under-perform the ECSTELECOM. In addition to that, Eugene Technology is 1.96 times more volatile than ECSTELECOM Co. It trades about -0.1 of its total potential returns per unit of risk. ECSTELECOM Co is currently generating about -0.03 per unit of volatility. If you would invest  291,500  in ECSTELECOM Co on September 4, 2024 and sell it today you would lose (8,500) from holding ECSTELECOM Co or give up 2.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Eugene Technology CoLtd  vs.  ECSTELECOM Co

Eugene Technology CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eugene Technology CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ECSTELECOM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECSTELECOM Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ECSTELECOM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eugene Technology and ECSTELECOM

The main advantage of trading using opposite Eugene Technology and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eugene Technology position performs unexpectedly, ECSTELECOM 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 ECSTELECOM will offset losses from the drop in ECSTELECOM's long position.

The idea behind Eugene Technology CoLtd and ECSTELECOM Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.