Correlation Between CG Hi and Ecoplastic

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

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

Diversification Opportunities for CG Hi and Ecoplastic

0.96

Correlation Coefficient

CG Hi  Ecoplastic

Almost no diversification

The 3 months correlation between 264660 and Ecoplastic is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding CG Hi Tech and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic and CG Hi 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 CG Hi Tech are associated (or correlated) with Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of CG Hi i.e., CG Hi and Ecoplastic go up and down completely randomly.

Pair Corralation between CG Hi and Ecoplastic

Assuming the 90 days trading horizon CG Hi is expected to generate 1.17 times less return on investment than Ecoplastic. But when comparing it to its historical volatility, CG Hi Tech is 1.0 times less risky than Ecoplastic. It trades about 0.24 of its potential returns per unit of risk. Ecoplastic is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  207,074  in Ecoplastic on October 8, 2024 and sell it today you would earn a total of  30,426  from holding Ecoplastic or generate 14.69% return on investment over 90 days.

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

CG Hi Tech  vs.  Ecoplastic

CG Hi Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CG Hi Tech 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ecoplastic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CG Hi and Ecoplastic

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

The idea behind CG Hi Tech and Ecoplastic 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.