Correlation Between EASTMAN and Asure Software

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

By analyzing existing cross correlation between EASTMAN CHEM 48 and Asure Software, you can compare the effects of market volatilities on EASTMAN and Asure Software 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 EASTMAN with a short position of Asure Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of EASTMAN and Asure Software.

Diversification Opportunities for EASTMAN and Asure Software

-0.04

Correlation Coefficient

EASTMAN  Asure Software

Good diversification

The 3 months correlation between EASTMAN and Asure is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding EASTMAN CHEM 48 and Asure Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asure Software and EASTMAN 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 EASTMAN CHEM 48 are associated (or correlated) with Asure Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asure Software has no effect on the direction of EASTMAN i.e., EASTMAN and Asure Software go up and down completely randomly.

Pair Corralation between EASTMAN and Asure Software

Assuming the 90 days trading horizon EASTMAN CHEM 48 is expected to under-perform the Asure Software. But the bond apears to be less risky and, when comparing its historical volatility, EASTMAN CHEM 48 is 1.88 times less risky than Asure Software. The bond trades about -0.21 of its potential returns per unit of risk. The Asure Software is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  916.00  in Asure Software on September 14, 2024 and sell it today you would earn a total of  30.00  from holding Asure Software or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.56%
Values	Daily Returns

EASTMAN CHEM 48  vs.  Asure Software

EASTMAN CHEM 48

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EASTMAN CHEM 48 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for EASTMAN CHEM 48 investors.

Asure Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Asure Software are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Asure Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EASTMAN and Asure Software

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

The idea behind EASTMAN CHEM 48 and Asure Software 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.