Correlation Between EEducation Albert and Footway Group

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

By analyzing existing cross correlation between eEducation Albert AB and Footway Group AB, you can compare the effects of market volatilities on EEducation Albert and Footway Group 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 EEducation Albert with a short position of Footway Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of EEducation Albert and Footway Group.

Diversification Opportunities for EEducation Albert and Footway Group

0.64

Correlation Coefficient

EEducation Albert  Footway Group

Poor diversification

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

Pair Corralation between EEducation Albert and Footway Group

Assuming the 90 days trading horizon eEducation Albert AB is expected to generate 0.49 times more return on investment than Footway Group. However, eEducation Albert AB is 2.04 times less risky than Footway Group. It trades about -0.13 of its potential returns per unit of risk. Footway Group AB is currently generating about -0.14 per unit of risk. If you would invest  399.00  in eEducation Albert AB on September 12, 2024 and sell it today you would lose (58.00) from holding eEducation Albert AB or give up 14.54% of portfolio value over 90 days.

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

eEducation Albert AB  vs.  Footway Group AB

eEducation Albert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eEducation Albert AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Footway Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Footway Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with EEducation Albert and Footway Group

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

The idea behind eEducation Albert AB and Footway Group AB 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.