Correlation Between Eagon Industrial and MEDIPOST

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

Diversification Opportunities for Eagon Industrial and MEDIPOST

0.56

Correlation Coefficient

Eagon Industrial  MEDIPOST

Very weak diversification

The 3 months correlation between Eagon and MEDIPOST is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial Co and MEDIPOST Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPOST 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 MEDIPOST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPOST has no effect on the direction of Eagon Industrial i.e., Eagon Industrial and MEDIPOST go up and down completely randomly.

Pair Corralation between Eagon Industrial and MEDIPOST

Assuming the 90 days trading horizon Eagon Industrial is expected to generate 517.73 times less return on investment than MEDIPOST. But when comparing it to its historical volatility, Eagon Industrial Co is 2.52 times less risky than MEDIPOST. It trades about 0.0 of its potential returns per unit of risk. MEDIPOST Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  688,000  in MEDIPOST Co on October 4, 2024 and sell it today you would earn a total of  464,000  from holding MEDIPOST Co or generate 67.44% return on investment over 90 days.

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

Eagon Industrial Co  vs.  MEDIPOST Co

Eagon Industrial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagon Industrial Co are ranked lower than 5 (%) 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.

MEDIPOST

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MEDIPOST Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MEDIPOST sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagon Industrial and MEDIPOST

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

The idea behind Eagon Industrial Co and MEDIPOST 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.