Correlation Between Easyhome New and Eit Environmental

Can any of the company-specific risk be diversified away by investing in both Easyhome New and Eit Environmental 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 Eit Environmental 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 Eit Environmental Development, you can compare the effects of market volatilities on Easyhome New and Eit Environmental 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 Eit Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easyhome New and Eit Environmental.

Diversification Opportunities for Easyhome New and Eit Environmental

0.05

Correlation Coefficient

Easyhome New  Eit Environmental

Significant diversification

The 3 months correlation between Easyhome and Eit is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Easyhome New Retail and Eit Environmental Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eit Environmental 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 Eit Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eit Environmental has no effect on the direction of Easyhome New i.e., Easyhome New and Eit Environmental go up and down completely randomly.

Pair Corralation between Easyhome New and Eit Environmental

Assuming the 90 days trading horizon Easyhome New Retail is expected to under-perform the Eit Environmental. In addition to that, Easyhome New is 2.24 times more volatile than Eit Environmental Development. It trades about -0.05 of its total potential returns per unit of risk. Eit Environmental Development is currently generating about -0.07 per unit of volatility. If you would invest  1,561  in Eit Environmental Development on October 22, 2024 and sell it today you would lose (49.00) from holding Eit Environmental Development or give up 3.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Easyhome New Retail  vs.  Eit Environmental Development

Easyhome New Retail

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Easyhome New Retail are ranked lower than 8 (%) 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.

Eit Environmental

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eit Environmental Development are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eit Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Easyhome New and Eit Environmental

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

The idea behind Easyhome New Retail and Eit Environmental Development 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.

Check out your portfolio center.

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.