Correlation Between Eclat Textile and BH Global

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

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

Diversification Opportunities for Eclat Textile and BH Global

-0.18

Correlation Coefficient

Eclat Textile  BH Global

Good diversification

The 3 months correlation between Eclat and 911608 is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Eclat Textile Co and BH Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Global and Eclat Textile 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 Eclat Textile Co are associated (or correlated) with BH Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Global has no effect on the direction of Eclat Textile i.e., Eclat Textile and BH Global go up and down completely randomly.

Pair Corralation between Eclat Textile and BH Global

Assuming the 90 days trading horizon Eclat Textile Co is expected to under-perform the BH Global. But the stock apears to be less risky and, when comparing its historical volatility, Eclat Textile Co is 1.66 times less risky than BH Global. The stock trades about 0.0 of its potential returns per unit of risk. The BH Global is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  286.00  in BH Global on September 4, 2024 and sell it today you would earn a total of  32.00  from holding BH Global or generate 11.19% return on investment over 90 days.

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

Eclat Textile Co  vs.  BH Global

Eclat Textile

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eclat Textile Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Eclat Textile is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BH Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eclat Textile and BH Global

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

The idea behind Eclat Textile Co and BH Global 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .