Correlation Between Eastern Technical and XSpring Capital

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

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

Diversification Opportunities for Eastern Technical and XSpring Capital

0.36

Correlation Coefficient

Eastern Technical  XSpring Capital

Weak diversification

The 3 months correlation between Eastern and XSpring is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and XSpring Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XSpring Capital Public and Eastern Technical 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 Technical Engineering are associated (or correlated) with XSpring Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XSpring Capital Public has no effect on the direction of Eastern Technical i.e., Eastern Technical and XSpring Capital go up and down completely randomly.

Pair Corralation between Eastern Technical and XSpring Capital

Assuming the 90 days trading horizon Eastern Technical Engineering is expected to under-perform the XSpring Capital. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Technical Engineering is 1.33 times less risky than XSpring Capital. The stock trades about -0.08 of its potential returns per unit of risk. The XSpring Capital Public is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  93.00  in XSpring Capital Public on September 4, 2024 and sell it today you would earn a total of  0.00  from holding XSpring Capital Public or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Eastern Technical Engineering  vs.  XSpring Capital Public

Eastern Technical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Technical Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

XSpring Capital Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XSpring Capital Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, XSpring Capital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eastern Technical and XSpring Capital

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

The idea behind Eastern Technical Engineering and XSpring Capital Public 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.