Correlation Between Eshallgo and Palomar Holdings

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

By analyzing existing cross correlation between Eshallgo Class A and Palomar Holdings, you can compare the effects of market volatilities on Eshallgo and Palomar Holdings 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 Eshallgo with a short position of Palomar Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eshallgo and Palomar Holdings.

Diversification Opportunities for Eshallgo and Palomar Holdings

0.61

Correlation Coefficient

Eshallgo  Palomar Holdings

Poor diversification

The 3 months correlation between Eshallgo and Palomar is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eshallgo Class A and Palomar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palomar Holdings and Eshallgo 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 Eshallgo Class A are associated (or correlated) with Palomar Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palomar Holdings has no effect on the direction of Eshallgo i.e., Eshallgo and Palomar Holdings go up and down completely randomly.

Pair Corralation between Eshallgo and Palomar Holdings

Given the investment horizon of 90 days Eshallgo Class A is expected to generate 3.16 times more return on investment than Palomar Holdings. However, Eshallgo is 3.16 times more volatile than Palomar Holdings. It trades about 0.17 of its potential returns per unit of risk. Palomar Holdings is currently generating about 0.09 per unit of risk. If you would invest  218.00  in Eshallgo Class A on September 4, 2024 and sell it today you would earn a total of  188.00  from holding Eshallgo Class A or generate 86.24% return on investment over 90 days.

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

Eshallgo Class A  vs.  Palomar Holdings

Eshallgo Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eshallgo Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Eshallgo displayed solid returns over the last few months and may actually be approaching a breakup point.

Palomar Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Palomar Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eshallgo and Palomar Holdings

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

The idea behind Eshallgo Class A and Palomar Holdings 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.