Correlation Between P Duke and Eclat Textile

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

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

Diversification Opportunities for P Duke and Eclat Textile

0.19

Correlation Coefficient

P Duke  Eclat Textile

Average diversification

The 3 months correlation between 8109 and Eclat is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding P Duke Technology Co and Eclat Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eclat Textile and P Duke 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 P Duke Technology Co are associated (or correlated) with Eclat Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eclat Textile has no effect on the direction of P Duke i.e., P Duke and Eclat Textile go up and down completely randomly.

Pair Corralation between P Duke and Eclat Textile

Assuming the 90 days trading horizon P Duke Technology Co is expected to under-perform the Eclat Textile. But the stock apears to be less risky and, when comparing its historical volatility, P Duke Technology Co is 3.12 times less risky than Eclat Textile. The stock trades about -0.01 of its potential returns per unit of risk. The Eclat Textile Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  52,200  in Eclat Textile Co on September 5, 2024 and sell it today you would earn a total of  2,400  from holding Eclat Textile Co or generate 4.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

P Duke Technology Co  vs.  Eclat Textile Co

P Duke Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days P Duke Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, P Duke is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Eclat Textile

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eclat Textile Co are ranked lower than 3 (%) 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.

Pair Trading with P Duke and Eclat Textile

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

The idea behind P Duke Technology Co and Eclat Textile 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.