Correlation Between Eastern Star and Eastern Polymer

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

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

Diversification Opportunities for Eastern Star and Eastern Polymer

0.61

Correlation Coefficient

Eastern Star  Eastern Polymer

Poor diversification

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

Pair Corralation between Eastern Star and Eastern Polymer

Assuming the 90 days trading horizon Eastern Star Real is expected to generate 0.9 times more return on investment than Eastern Polymer. However, Eastern Star Real is 1.11 times less risky than Eastern Polymer. It trades about 0.01 of its potential returns per unit of risk. Eastern Polymer Group is currently generating about -0.09 per unit of risk. If you would invest  23.00  in Eastern Star Real on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Eastern Star Real or generate 0.0% return on investment over 90 days.

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

Eastern Star Real  vs.  Eastern Polymer Group

Eastern Star Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Star Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Eastern Star is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Eastern Polymer Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Polymer Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Eastern Star and Eastern Polymer

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

The idea behind Eastern Star Real and Eastern Polymer Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.