Correlation Between EOSDAC and LUNC

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

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

Diversification Opportunities for EOSDAC and LUNC

0.55

Correlation Coefficient

EOSDAC  LUNC

Very weak diversification

The 3 months correlation between EOSDAC and LUNC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and LUNC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUNC and EOSDAC 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 EOSDAC are associated (or correlated) with LUNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUNC has no effect on the direction of EOSDAC i.e., EOSDAC and LUNC go up and down completely randomly.

Pair Corralation between EOSDAC and LUNC

Assuming the 90 days trading horizon EOSDAC is expected to generate 3.32 times more return on investment than LUNC. However, EOSDAC is 3.32 times more volatile than LUNC. It trades about 0.11 of its potential returns per unit of risk. LUNC is currently generating about 0.19 per unit of risk. If you would invest  0.02  in EOSDAC on August 30, 2024 and sell it today you would earn a total of  0.01  from holding EOSDAC or generate 61.95% return on investment over 90 days.

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

EOSDAC  vs.  LUNC

EOSDAC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EOSDAC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, EOSDAC sustained solid returns over the last few months and may actually be approaching a breakup point.

LUNC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LUNC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, LUNC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EOSDAC and LUNC

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

The idea behind EOSDAC and LUNC 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.