Correlation Between SV Investment and Eagon Industrial

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

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

Diversification Opportunities for SV Investment and Eagon Industrial

-0.32

Correlation Coefficient

SV Investment  Eagon Industrial

Very good diversification

The 3 months correlation between 289080 and Eagon is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding SV Investment and Eagon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagon Industrial and SV Investment 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 SV Investment are associated (or correlated) with Eagon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagon Industrial has no effect on the direction of SV Investment i.e., SV Investment and Eagon Industrial go up and down completely randomly.

Pair Corralation between SV Investment and Eagon Industrial

Assuming the 90 days trading horizon SV Investment is expected to generate 6.38 times less return on investment than Eagon Industrial. But when comparing it to its historical volatility, SV Investment is 5.89 times less risky than Eagon Industrial. It trades about 0.13 of its potential returns per unit of risk. Eagon Industrial Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  510,981  in Eagon Industrial Co on October 22, 2024 and sell it today you would earn a total of  81,019  from holding Eagon Industrial Co or generate 15.86% return on investment over 90 days.

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

SV Investment  vs.  Eagon Industrial Co

SV Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SV Investment 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.

Eagon Industrial

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eagon Industrial Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eagon Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SV Investment and Eagon Industrial

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

The idea behind SV Investment and Eagon Industrial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.