Correlation Between Eastern and 191216CT5

Can any of the company-specific risk be diversified away by investing in both Eastern and 191216CT5 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 Eastern and 191216CT5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastern Co and COCA COLA CO, you can compare the effects of market volatilities on Eastern and 191216CT5 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 Eastern with a short position of 191216CT5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and 191216CT5.

Diversification Opportunities for Eastern and 191216CT5

0.37

Correlation Coefficient

Eastern  191216CT5

Weak diversification

The 3 months correlation between Eastern and 191216CT5 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO and Eastern 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 Eastern Co are associated (or correlated) with 191216CT5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of Eastern i.e., Eastern and 191216CT5 go up and down completely randomly.

Pair Corralation between Eastern and 191216CT5

Considering the 90-day investment horizon Eastern Co is expected to under-perform the 191216CT5. In addition to that, Eastern is 5.52 times more volatile than COCA COLA CO. It trades about -0.11 of its total potential returns per unit of risk. COCA COLA CO is currently generating about -0.06 per unit of volatility. If you would invest  9,787  in COCA COLA CO on September 28, 2024 and sell it today you would lose (155.00) from holding COCA COLA CO or give up 1.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Eastern Co  vs.  COCA COLA CO

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary 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.

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216CT5 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eastern and 191216CT5

The main advantage of trading using opposite Eastern and 191216CT5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern position performs unexpectedly, 191216CT5 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 191216CT5 will offset losses from the drop in 191216CT5's long position.

The idea behind Eastern Co and COCA COLA CO 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.