Correlation Between Ecopro BM and Amogreentech

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

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

Diversification Opportunities for Ecopro BM and Amogreentech

0.56

Correlation Coefficient

Ecopro BM  Amogreentech

Very weak diversification

The 3 months correlation between Ecopro and Amogreentech is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ecopro BM Co and Amogreentech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amogreentech and Ecopro BM 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 Ecopro BM Co are associated (or correlated) with Amogreentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amogreentech has no effect on the direction of Ecopro BM i.e., Ecopro BM and Amogreentech go up and down completely randomly.

Pair Corralation between Ecopro BM and Amogreentech

Assuming the 90 days trading horizon Ecopro BM Co is expected to generate 1.12 times more return on investment than Amogreentech. However, Ecopro BM is 1.12 times more volatile than Amogreentech Co. It trades about -0.04 of its potential returns per unit of risk. Amogreentech Co is currently generating about -0.12 per unit of risk. If you would invest  18,800,000  in Ecopro BM Co on August 31, 2024 and sell it today you would lose (4,360,000) from holding Ecopro BM Co or give up 23.19% of portfolio value over 90 days.

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

Ecopro BM Co  vs.  Amogreentech Co

Ecopro BM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecopro BM Co 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Amogreentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amogreentech Co 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ecopro BM and Amogreentech

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

The idea behind Ecopro BM Co and Amogreentech 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.