Correlation Between Eagle Veterinary and High Tech

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

By analyzing existing cross correlation between Eagle Veterinary Technology and High Tech Pharm, you can compare the effects of market volatilities on Eagle Veterinary and High Tech 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 Eagle Veterinary with a short position of High Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Veterinary and High Tech.

Diversification Opportunities for Eagle Veterinary and High Tech

-0.46

Correlation Coefficient

Eagle Veterinary  High Tech

Very good diversification

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

Pair Corralation between Eagle Veterinary and High Tech

Assuming the 90 days trading horizon Eagle Veterinary Technology is expected to under-perform the High Tech. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Veterinary Technology is 1.87 times less risky than High Tech. The stock trades about -0.11 of its potential returns per unit of risk. The High Tech Pharm is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,400,000  in High Tech Pharm on December 30, 2024 and sell it today you would earn a total of  15,000  from holding High Tech Pharm or generate 1.07% return on investment over 90 days.

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

Eagle Veterinary Technology  vs.  High Tech Pharm

Eagle Veterinary Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Veterinary Technology 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.

High Tech Pharm

Risk-Adjusted Performance

Weak

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

Pair Trading with Eagle Veterinary and High Tech

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

The idea behind Eagle Veterinary Technology and High Tech Pharm 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..