Correlation Between De Rucci and Eastroc Beverage

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

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

Diversification Opportunities for De Rucci and Eastroc Beverage

0.46

Correlation Coefficient

De Rucci  Eastroc Beverage

Very weak diversification

The 3 months correlation between 001323 and Eastroc is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding De Rucci Healthy and Eastroc Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastroc Beverage and De Rucci 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 De Rucci Healthy are associated (or correlated) with Eastroc Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastroc Beverage has no effect on the direction of De Rucci i.e., De Rucci and Eastroc Beverage go up and down completely randomly.

Pair Corralation between De Rucci and Eastroc Beverage

Assuming the 90 days trading horizon De Rucci Healthy is expected to under-perform the Eastroc Beverage. But the stock apears to be less risky and, when comparing its historical volatility, De Rucci Healthy is 1.37 times less risky than Eastroc Beverage. The stock trades about -0.05 of its potential returns per unit of risk. The Eastroc Beverage Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  22,094  in Eastroc Beverage Group on October 5, 2024 and sell it today you would earn a total of  2,650  from holding Eastroc Beverage Group or generate 11.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

De Rucci Healthy  vs.  Eastroc Beverage Group

De Rucci Healthy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Rucci Healthy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, De Rucci sustained solid returns over the last few months and may actually be approaching a breakup point.

Eastroc Beverage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastroc Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with De Rucci and Eastroc Beverage

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

The idea behind De Rucci Healthy and Eastroc Beverage Group 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.