Correlation Between C20 and EOS

Can any of the company-specific risk be diversified away by investing in both C20 and EOS 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 C20 and EOS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C20 and EOS, you can compare the effects of market volatilities on C20 and EOS 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 C20 with a short position of EOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of C20 and EOS.

Diversification Opportunities for C20 and EOS

0.4

Correlation Coefficient

C20  EOS

Very weak diversification

The 3 months correlation between C20 and EOS is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding C20 and EOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOS and C20 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 C20 are associated (or correlated) with EOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOS has no effect on the direction of C20 i.e., C20 and EOS go up and down completely randomly.

Pair Corralation between C20 and EOS

If you would invest  45.00  in EOS on September 2, 2024 and sell it today you would earn a total of  49.00  from holding EOS or generate 108.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.52%
Values	Daily Returns

C20  vs.  EOS

C20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, C20 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

EOS

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EOS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, EOS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C20 and EOS

The main advantage of trading using opposite C20 and EOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C20 position performs unexpectedly, EOS 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 EOS will offset losses from the drop in EOS's long position.

The idea behind C20 and EOS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.