Correlation Between Covalon Technologies and Eastwood Bio-Medical

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

By analyzing existing cross correlation between Covalon Technologies and Eastwood Bio Medical Canada, you can compare the effects of market volatilities on Covalon Technologies and Eastwood Bio-Medical 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 Covalon Technologies with a short position of Eastwood Bio-Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covalon Technologies and Eastwood Bio-Medical.

Diversification Opportunities for Covalon Technologies and Eastwood Bio-Medical

0.3

Correlation Coefficient

Covalon Technologies  Eastwood Bio-Medical

Weak diversification

The 3 months correlation between Covalon and Eastwood is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Covalon Technologies and Eastwood Bio Medical Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastwood Bio Medical and Covalon Technologies 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 Covalon Technologies are associated (or correlated) with Eastwood Bio-Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastwood Bio Medical has no effect on the direction of Covalon Technologies i.e., Covalon Technologies and Eastwood Bio-Medical go up and down completely randomly.

Pair Corralation between Covalon Technologies and Eastwood Bio-Medical

Assuming the 90 days horizon Covalon Technologies is expected to generate 6.77 times less return on investment than Eastwood Bio-Medical. But when comparing it to its historical volatility, Covalon Technologies is 7.37 times less risky than Eastwood Bio-Medical. It trades about 0.1 of its potential returns per unit of risk. Eastwood Bio Medical Canada is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Eastwood Bio Medical Canada on September 1, 2024 and sell it today you would earn a total of  10.00  from holding Eastwood Bio Medical Canada or generate 15.38% return on investment over 90 days.

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

Covalon Technologies  vs.  Eastwood Bio Medical Canada

Covalon Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Covalon Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Covalon Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Eastwood Bio Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastwood Bio Medical Canada are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eastwood Bio-Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Covalon Technologies and Eastwood Bio-Medical

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

The idea behind Covalon Technologies and Eastwood Bio Medical Canada 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.