Correlation Between Analog Devices and Eshallgo

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

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

Diversification Opportunities for Analog Devices and Eshallgo

-0.64

Correlation Coefficient

Analog Devices  Eshallgo

Excellent diversification

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

Pair Corralation between Analog Devices and Eshallgo

Considering the 90-day investment horizon Analog Devices is expected to generate 87.61 times less return on investment than Eshallgo. But when comparing it to its historical volatility, Analog Devices is 3.69 times less risky than Eshallgo. It trades about 0.01 of its potential returns per unit of risk. Eshallgo Class A is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  215.00  in Eshallgo Class A on September 1, 2024 and sell it today you would earn a total of  150.00  from holding Eshallgo Class A or generate 69.77% return on investment over 90 days.

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

Analog Devices  vs.  Eshallgo Class A

Analog Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Analog Devices has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Eshallgo Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eshallgo Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Eshallgo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Analog Devices and Eshallgo

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

The idea behind Analog Devices and Eshallgo Class A 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.