Correlation Between Echomarketing CoLtd and Formetal

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

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

Diversification Opportunities for Echomarketing CoLtd and Formetal

0.26

Correlation Coefficient

Echomarketing CoLtd  Formetal

Modest diversification

The 3 months correlation between Echomarketing and Formetal is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Echomarketing CoLtd and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and Echomarketing CoLtd 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 Echomarketing CoLtd are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Echomarketing CoLtd i.e., Echomarketing CoLtd and Formetal go up and down completely randomly.

Pair Corralation between Echomarketing CoLtd and Formetal

Assuming the 90 days trading horizon Echomarketing CoLtd is expected to under-perform the Formetal. But the stock apears to be less risky and, when comparing its historical volatility, Echomarketing CoLtd is 2.62 times less risky than Formetal. The stock trades about -0.22 of its potential returns per unit of risk. The Formetal Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  300,000  in Formetal Co on December 28, 2024 and sell it today you would earn a total of  0.00  from holding Formetal Co or generate 0.0% return on investment over 90 days.

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

Echomarketing CoLtd  vs.  Formetal Co

Echomarketing CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Echomarketing CoLtd 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Formetal

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Formetal Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Formetal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Echomarketing CoLtd and Formetal

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

The idea behind Echomarketing CoLtd and Formetal Co 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..