Correlation Between Eagle Cold and Otsuka Information

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

By analyzing existing cross correlation between Eagle Cold Storage and Otsuka Information Technology, you can compare the effects of market volatilities on Eagle Cold and Otsuka Information 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 Eagle Cold with a short position of Otsuka Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Cold and Otsuka Information.

Diversification Opportunities for Eagle Cold and Otsuka Information

-0.62

Correlation Coefficient

Eagle Cold  Otsuka Information

Excellent diversification

The 3 months correlation between Eagle and Otsuka is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Cold Storage and Otsuka Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otsuka Information and Eagle Cold 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 Eagle Cold Storage are associated (or correlated) with Otsuka Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otsuka Information has no effect on the direction of Eagle Cold i.e., Eagle Cold and Otsuka Information go up and down completely randomly.

Pair Corralation between Eagle Cold and Otsuka Information

Assuming the 90 days trading horizon Eagle Cold Storage is expected to under-perform the Otsuka Information. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Cold Storage is 1.87 times less risky than Otsuka Information. The stock trades about -0.1 of its potential returns per unit of risk. The Otsuka Information Technology is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  14,800  in Otsuka Information Technology on August 31, 2024 and sell it today you would earn a total of  1,950  from holding Otsuka Information Technology or generate 13.18% return on investment over 90 days.

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

Eagle Cold Storage  vs.  Otsuka Information Technology

Eagle Cold Storage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Otsuka Information

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Eagle Cold and Otsuka Information

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

The idea behind Eagle Cold Storage and Otsuka Information Technology 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.