Correlation Between EBEST Investment and InBody CoLtd

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

Diversification Opportunities for EBEST Investment and InBody CoLtd

0.39

Correlation Coefficient

EBEST Investment  InBody CoLtd

Weak diversification

The 3 months correlation between EBEST and InBody is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and InBody CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InBody CoLtd 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 InBody CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InBody CoLtd has no effect on the direction of EBEST Investment i.e., EBEST Investment and InBody CoLtd go up and down completely randomly.

Pair Corralation between EBEST Investment and InBody CoLtd

Assuming the 90 days trading horizon EBEST Investment Securities is expected to under-perform the InBody CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, EBEST Investment Securities is 1.11 times less risky than InBody CoLtd. The stock trades about -0.02 of its potential returns per unit of risk. The InBody CoLtd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,179,607  in InBody CoLtd on October 22, 2024 and sell it today you would earn a total of  255,393  from holding InBody CoLtd or generate 11.72% return on investment over 90 days.

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

EBEST Investment Securities  vs.  InBody CoLtd

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 somewhat strong basic indicators, EBEST Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

InBody CoLtd

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in InBody CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, InBody CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EBEST Investment and InBody CoLtd

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

The idea behind EBEST Investment Securities and InBody CoLtd 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.