Correlation Between Whitestone and Econocom Group

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

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

Diversification Opportunities for Whitestone and Econocom Group

-0.59

Correlation Coefficient

Whitestone  Econocom Group

Excellent diversification

The 3 months correlation between Whitestone and Econocom is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Whitestone Group and Econocom Group SANV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Econocom Group SANV and Whitestone 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 Whitestone Group are associated (or correlated) with Econocom Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Econocom Group SANV has no effect on the direction of Whitestone i.e., Whitestone and Econocom Group go up and down completely randomly.

Pair Corralation between Whitestone and Econocom Group

Assuming the 90 days trading horizon Whitestone Group is expected to generate 1.07 times more return on investment than Econocom Group. However, Whitestone is 1.07 times more volatile than Econocom Group SANV. It trades about 0.29 of its potential returns per unit of risk. Econocom Group SANV is currently generating about -0.43 per unit of risk. If you would invest  1,190  in Whitestone Group on September 19, 2024 and sell it today you would earn a total of  90.00  from holding Whitestone Group or generate 7.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Whitestone Group  vs.  Econocom Group SANV

Whitestone Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Whitestone Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Whitestone is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Econocom Group SANV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Econocom Group SANV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Whitestone and Econocom Group

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

The idea behind Whitestone Group and Econocom Group SANV 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.