Correlation Between Eastwood Bio and Focus Graphite

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

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

Diversification Opportunities for Eastwood Bio and Focus Graphite

-0.31

Correlation Coefficient

Eastwood Bio  Focus Graphite

Very good diversification

The 3 months correlation between Eastwood and Focus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and Eastwood Bio 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 Eastwood Bio Medical Canada are associated (or correlated) with Focus Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Graphite has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Focus Graphite go up and down completely randomly.

Pair Corralation between Eastwood Bio and Focus Graphite

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to generate 3.98 times more return on investment than Focus Graphite. However, Eastwood Bio is 3.98 times more volatile than Focus Graphite. It trades about 0.09 of its potential returns per unit of risk. Focus Graphite is currently generating about -0.1 per unit of risk. If you would invest  64.00  in Eastwood Bio Medical Canada on September 4, 2024 and sell it today you would earn a total of  11.00  from holding Eastwood Bio Medical Canada or generate 17.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Eastwood Bio Medical Canada  vs.  Focus Graphite

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 showed solid returns over the last few months and may actually be approaching a breakup point.

Focus Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Focus Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Eastwood Bio and Focus Graphite

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

The idea behind Eastwood Bio Medical Canada and Focus Graphite 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.