Correlation Between Eclat Textile and Aspeed Technology

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

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

Diversification Opportunities for Eclat Textile and Aspeed Technology

0.74

Correlation Coefficient

Eclat Textile  Aspeed Technology

Poor diversification

The 3 months correlation between Eclat and Aspeed is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Eclat Textile Co and Aspeed Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspeed Technology and Eclat Textile 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 Eclat Textile Co are associated (or correlated) with Aspeed Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspeed Technology has no effect on the direction of Eclat Textile i.e., Eclat Textile and Aspeed Technology go up and down completely randomly.

Pair Corralation between Eclat Textile and Aspeed Technology

Assuming the 90 days trading horizon Eclat Textile is expected to generate 8.27 times less return on investment than Aspeed Technology. But when comparing it to its historical volatility, Eclat Textile Co is 1.95 times less risky than Aspeed Technology. It trades about 0.01 of its potential returns per unit of risk. Aspeed Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  189,447  in Aspeed Technology on October 4, 2024 and sell it today you would earn a total of  143,053  from holding Aspeed Technology or generate 75.51% return on investment over 90 days.

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

Eclat Textile Co  vs.  Aspeed Technology

Eclat Textile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eclat Textile Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eclat Textile is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Aspeed Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aspeed Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Eclat Textile and Aspeed Technology

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

The idea behind Eclat Textile Co and Aspeed 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.