Correlation Between Eline Entertainment and All American

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

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

Diversification Opportunities for Eline Entertainment and All American

0.32

Correlation Coefficient

Eline Entertainment  All American

Weak diversification

The 3 months correlation between Eline and All is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eline Entertainment Group and All American Gld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All American Gld and Eline Entertainment 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 Eline Entertainment Group are associated (or correlated) with All American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All American Gld has no effect on the direction of Eline Entertainment i.e., Eline Entertainment and All American go up and down completely randomly.

Pair Corralation between Eline Entertainment and All American

Given the investment horizon of 90 days Eline Entertainment Group is expected to generate 1.83 times more return on investment than All American. However, Eline Entertainment is 1.83 times more volatile than All American Gld. It trades about 0.1 of its potential returns per unit of risk. All American Gld is currently generating about 0.08 per unit of risk. If you would invest  0.05  in Eline Entertainment Group on September 4, 2024 and sell it today you would lose (0.03) from holding Eline Entertainment Group or give up 60.0% of portfolio value over 90 days.

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

Eline Entertainment Group  vs.  All American Gld

Eline Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eline Entertainment Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Eline Entertainment demonstrated solid returns over the last few months and may actually be approaching a breakup point.

All American Gld

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in All American Gld are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, All American exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eline Entertainment and All American

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

The idea behind Eline Entertainment Group and All American Gld 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.