Correlation Between Easyhome New and SGSG Sciencetechnolog

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

By analyzing existing cross correlation between Easyhome New Retail and SGSG Sciencetechnology Co, you can compare the effects of market volatilities on Easyhome New and SGSG Sciencetechnolog 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 Easyhome New with a short position of SGSG Sciencetechnolog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easyhome New and SGSG Sciencetechnolog.

Diversification Opportunities for Easyhome New and SGSG Sciencetechnolog

0.72

Correlation Coefficient

Easyhome New  SGSG Sciencetechnolog

Poor diversification

The 3 months correlation between Easyhome and SGSG is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Easyhome New Retail and SGSG Sciencetechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGSG Sciencetechnology and Easyhome New 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 Easyhome New Retail are associated (or correlated) with SGSG Sciencetechnolog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGSG Sciencetechnology has no effect on the direction of Easyhome New i.e., Easyhome New and SGSG Sciencetechnolog go up and down completely randomly.

Pair Corralation between Easyhome New and SGSG Sciencetechnolog

Assuming the 90 days trading horizon Easyhome New is expected to generate 4.86 times less return on investment than SGSG Sciencetechnolog. But when comparing it to its historical volatility, Easyhome New Retail is 1.85 times less risky than SGSG Sciencetechnolog. It trades about 0.09 of its potential returns per unit of risk. SGSG Sciencetechnology Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,942  in SGSG Sciencetechnology Co on October 25, 2024 and sell it today you would earn a total of  4,170  from holding SGSG Sciencetechnology Co or generate 214.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Easyhome New Retail  vs.  SGSG Sciencetechnology Co

Easyhome New Retail

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Easyhome New Retail are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Easyhome New sustained solid returns over the last few months and may actually be approaching a breakup point.

SGSG Sciencetechnology

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SGSG Sciencetechnology Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SGSG Sciencetechnolog sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Easyhome New and SGSG Sciencetechnolog

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

The idea behind Easyhome New Retail and SGSG Sciencetechnology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.