Correlation Between East Africa and EOANGR

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

By analyzing existing cross correlation between East Africa Metals and EOANGR 665 30 APR 38, you can compare the effects of market volatilities on East Africa and EOANGR 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 Africa with a short position of EOANGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and EOANGR.

Diversification Opportunities for East Africa and EOANGR

-0.39

Correlation Coefficient

East Africa  EOANGR

Very good diversification

The 3 months correlation between East and EOANGR is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and EOANGR 665 30 APR 38 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EOANGR 665 30 and East Africa 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 Africa Metals are associated (or correlated) with EOANGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EOANGR 665 30 has no effect on the direction of East Africa i.e., East Africa and EOANGR go up and down completely randomly.

Pair Corralation between East Africa and EOANGR

Assuming the 90 days horizon East Africa Metals is expected to generate 64.86 times more return on investment than EOANGR. However, East Africa is 64.86 times more volatile than EOANGR 665 30 APR 38. It trades about 0.09 of its potential returns per unit of risk. EOANGR 665 30 APR 38 is currently generating about 0.03 per unit of risk. If you would invest  9.15  in East Africa Metals on September 28, 2024 and sell it today you would earn a total of  1.85  from holding East Africa Metals or generate 20.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.84%
Values	Daily Returns

East Africa Metals  vs.  EOANGR 665 30 APR 38

East Africa Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Africa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

EOANGR 665 30

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EOANGR 665 30 APR 38 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EOANGR is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with East Africa and EOANGR

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

The idea behind East Africa Metals and EOANGR 665 30 APR 38 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.