Correlation Between SillaJen and Ecocab

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

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

Diversification Opportunities for SillaJen and Ecocab

0.64

Correlation Coefficient

SillaJen  Ecocab

Poor diversification

The 3 months correlation between SillaJen and Ecocab is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SillaJen and Ecocab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecocab and SillaJen 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 SillaJen are associated (or correlated) with Ecocab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecocab has no effect on the direction of SillaJen i.e., SillaJen and Ecocab go up and down completely randomly.

Pair Corralation between SillaJen and Ecocab

Assuming the 90 days trading horizon SillaJen is expected to generate 1.78 times less return on investment than Ecocab. But when comparing it to its historical volatility, SillaJen is 2.38 times less risky than Ecocab. It trades about 0.06 of its potential returns per unit of risk. Ecocab Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  159,600  in Ecocab Co on September 1, 2024 and sell it today you would earn a total of  11,800  from holding Ecocab Co or generate 7.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

SillaJen  vs.  Ecocab Co

SillaJen

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SillaJen are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SillaJen may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ecocab

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ecocab Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ecocab sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SillaJen and Ecocab

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

The idea behind SillaJen and Ecocab 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.