Correlation Between Eagon Industrial and Ecoplastic

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

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

Diversification Opportunities for Eagon Industrial and Ecoplastic

0.17

Correlation Coefficient

Eagon Industrial  Ecoplastic

Average diversification

The 3 months correlation between Eagon and Ecoplastic is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial Co and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic and Eagon Industrial 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 Eagon Industrial Co are associated (or correlated) with Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of Eagon Industrial i.e., Eagon Industrial and Ecoplastic go up and down completely randomly.

Pair Corralation between Eagon Industrial and Ecoplastic

Assuming the 90 days trading horizon Eagon Industrial is expected to generate 4.72 times less return on investment than Ecoplastic. In addition to that, Eagon Industrial is 2.37 times more volatile than Ecoplastic. It trades about 0.01 of its total potential returns per unit of risk. Ecoplastic is currently generating about 0.14 per unit of volatility. If you would invest  229,000  in Ecoplastic on December 25, 2024 and sell it today you would earn a total of  38,000  from holding Ecoplastic or generate 16.59% return on investment over 90 days.

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

Eagon Industrial Co  vs.  Ecoplastic

Eagon Industrial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eagon Industrial Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eagon Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ecoplastic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecoplastic are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ecoplastic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagon Industrial and Ecoplastic

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

The idea behind Eagon Industrial Co and Ecoplastic 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.