Correlation Between Premier and Etao International

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

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

Diversification Opportunities for Premier and Etao International

-0.45

Correlation Coefficient

Premier  Etao International

Very good diversification

The 3 months correlation between Premier and Etao is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Premier and Etao International Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etao International Co, and Premier 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 Premier are associated (or correlated) with Etao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etao International Co, has no effect on the direction of Premier i.e., Premier and Etao International go up and down completely randomly.

Pair Corralation between Premier and Etao International

If you would invest  2,047  in Premier on September 3, 2024 and sell it today you would earn a total of  243.00  from holding Premier or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Premier  vs.  Etao International Co,

Premier

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Premier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Etao International Co,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Etao International Co, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Etao International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Premier and Etao International

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

The idea behind Premier and Etao International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.