Correlation Between East Coast and E For

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

By analyzing existing cross correlation between East Coast Furnitech and E for L, you can compare the effects of market volatilities on East Coast and E For 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 East Coast with a short position of E For. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Coast and E For.

Diversification Opportunities for East Coast and E For

-0.86

Correlation Coefficient

East Coast  E For

Pay attention - limited upside

The 3 months correlation between East and EFORL is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding East Coast Furnitech and E for L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E for L and East Coast 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 East Coast Furnitech are associated (or correlated) with E For. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E for L has no effect on the direction of East Coast i.e., East Coast and E For go up and down completely randomly.

Pair Corralation between East Coast and E For

Assuming the 90 days trading horizon East Coast Furnitech is expected to under-perform the E For. But the stock apears to be less risky and, when comparing its historical volatility, East Coast Furnitech is 2.19 times less risky than E For. The stock trades about -0.16 of its potential returns per unit of risk. The E for L is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  13.00  in E for L on September 29, 2024 and sell it today you would earn a total of  14.00  from holding E for L or generate 107.69% return on investment over 90 days.

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

East Coast Furnitech  vs.  E for L

East Coast Furnitech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Coast Furnitech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

E for L

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E for L are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, E For sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with East Coast and E For

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

The idea behind East Coast Furnitech and E for L 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.