Correlation Between Global Standard and Eagle Veterinary

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

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

Diversification Opportunities for Global Standard and Eagle Veterinary

0.14

Correlation Coefficient

Global Standard  Eagle Veterinary

Average diversification

The 3 months correlation between Global and Eagle is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and Eagle Veterinary Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Veterinary Tec and Global Standard 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 Global Standard Technology are associated (or correlated) with Eagle Veterinary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Veterinary Tec has no effect on the direction of Global Standard i.e., Global Standard and Eagle Veterinary go up and down completely randomly.

Pair Corralation between Global Standard and Eagle Veterinary

Assuming the 90 days trading horizon Global Standard Technology is expected to generate 1.75 times more return on investment than Eagle Veterinary. However, Global Standard is 1.75 times more volatile than Eagle Veterinary Technology. It trades about 0.1 of its potential returns per unit of risk. Eagle Veterinary Technology is currently generating about -0.05 per unit of risk. If you would invest  1,520,649  in Global Standard Technology on October 23, 2024 and sell it today you would earn a total of  308,351  from holding Global Standard Technology or generate 20.28% return on investment over 90 days.

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

Global Standard Technology  vs.  Eagle Veterinary Technology

Global Standard Tech

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global Standard Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global Standard sustained solid returns over the last few months and may actually be approaching a breakup point.

Eagle Veterinary Tec

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Global Standard and Eagle Veterinary

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

The idea behind Global Standard Technology and Eagle Veterinary Technology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.