Correlation Between EO Technics and Nepes

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

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

Diversification Opportunities for EO Technics and Nepes

0.63

Correlation Coefficient

EO Technics  Nepes

Poor diversification

The 3 months correlation between 039030 and Nepes is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EO Technics Co and Nepes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepes and EO Technics 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 EO Technics Co are associated (or correlated) with Nepes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepes has no effect on the direction of EO Technics i.e., EO Technics and Nepes go up and down completely randomly.

Pair Corralation between EO Technics and Nepes

Assuming the 90 days trading horizon EO Technics Co is expected to generate 1.55 times more return on investment than Nepes. However, EO Technics is 1.55 times more volatile than Nepes. It trades about -0.03 of its potential returns per unit of risk. Nepes is currently generating about -0.18 per unit of risk. If you would invest  14,880,000  in EO Technics Co on September 12, 2024 and sell it today you would lose (1,760,000) from holding EO Technics Co or give up 11.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

EO Technics Co  vs.  Nepes

EO Technics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EO Technics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nepes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nepes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EO Technics and Nepes

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

The idea behind EO Technics Co and Nepes 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 Stocks Directory module to find actively traded stocks across global markets.