Correlation Between Eugene Technology and Heungkuk Metaltech

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

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

Diversification Opportunities for Eugene Technology and Heungkuk Metaltech

0.18

Correlation Coefficient

Eugene Technology  Heungkuk Metaltech

Average diversification

The 3 months correlation between Eugene and Heungkuk is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd and Heungkuk Metaltech CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heungkuk Metaltech CoLtd and Eugene Technology 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 Eugene Technology CoLtd are associated (or correlated) with Heungkuk Metaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heungkuk Metaltech CoLtd has no effect on the direction of Eugene Technology i.e., Eugene Technology and Heungkuk Metaltech go up and down completely randomly.

Pair Corralation between Eugene Technology and Heungkuk Metaltech

Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to generate 2.05 times more return on investment than Heungkuk Metaltech. However, Eugene Technology is 2.05 times more volatile than Heungkuk Metaltech CoLtd. It trades about 0.22 of its potential returns per unit of risk. Heungkuk Metaltech CoLtd is currently generating about -0.02 per unit of risk. If you would invest  3,085,000  in Eugene Technology CoLtd on December 25, 2024 and sell it today you would earn a total of  1,305,000  from holding Eugene Technology CoLtd or generate 42.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Eugene Technology CoLtd  vs.  Heungkuk Metaltech CoLtd

Eugene Technology CoLtd

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eugene Technology CoLtd are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eugene Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heungkuk Metaltech CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Heungkuk Metaltech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eugene Technology and Heungkuk Metaltech

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

The idea behind Eugene Technology CoLtd and Heungkuk Metaltech 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.