Correlation Between EBEST Investment and Stic Investments

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

By analyzing existing cross correlation between EBEST Investment Securities and Stic Investments, you can compare the effects of market volatilities on EBEST Investment and Stic Investments 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 EBEST Investment with a short position of Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Stic Investments.

Diversification Opportunities for EBEST Investment and Stic Investments

-0.3

Correlation Coefficient

EBEST Investment  Stic Investments

Very good diversification

The 3 months correlation between EBEST and Stic is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of EBEST Investment i.e., EBEST Investment and Stic Investments go up and down completely randomly.

Pair Corralation between EBEST Investment and Stic Investments

Assuming the 90 days trading horizon EBEST Investment Securities is expected to under-perform the Stic Investments. But the stock apears to be less risky and, when comparing its historical volatility, EBEST Investment Securities is 1.22 times less risky than Stic Investments. The stock trades about -0.01 of its potential returns per unit of risk. The Stic Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  496,866  in Stic Investments on September 21, 2024 and sell it today you would earn a total of  353,134  from holding Stic Investments or generate 71.07% return on investment over 90 days.

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

EBEST Investment Securities  vs.  Stic Investments

EBEST Investment Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBEST Investment Securities 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.

Stic Investments

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stic Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Stic Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EBEST Investment and Stic Investments

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

The idea behind EBEST Investment Securities and Stic Investments 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.