Correlation Between Eoptolink Technology and Ningbo Homelink

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

By analyzing existing cross correlation between Eoptolink Technology and Ningbo Homelink Eco iTech, you can compare the effects of market volatilities on Eoptolink Technology and Ningbo Homelink 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 Eoptolink Technology with a short position of Ningbo Homelink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eoptolink Technology and Ningbo Homelink.

Diversification Opportunities for Eoptolink Technology and Ningbo Homelink

-0.44

Correlation Coefficient

Eoptolink Technology  Ningbo Homelink

Very good diversification

The 3 months correlation between Eoptolink and Ningbo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eoptolink Technology and Ningbo Homelink Eco iTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Homelink Eco and Eoptolink Technology 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 Eoptolink Technology are associated (or correlated) with Ningbo Homelink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Homelink Eco has no effect on the direction of Eoptolink Technology i.e., Eoptolink Technology and Ningbo Homelink go up and down completely randomly.

Pair Corralation between Eoptolink Technology and Ningbo Homelink

Assuming the 90 days trading horizon Eoptolink Technology is expected to generate 1.81 times more return on investment than Ningbo Homelink. However, Eoptolink Technology is 1.81 times more volatile than Ningbo Homelink Eco iTech. It trades about 0.11 of its potential returns per unit of risk. Ningbo Homelink Eco iTech is currently generating about -0.01 per unit of risk. If you would invest  1,809  in Eoptolink Technology on October 10, 2024 and sell it today you would earn a total of  10,191  from holding Eoptolink Technology or generate 563.35% return on investment over 90 days.

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

Eoptolink Technology  vs.  Ningbo Homelink Eco iTech

Eoptolink Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eoptolink Technology 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.

Ningbo Homelink Eco

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Eoptolink Technology and Ningbo Homelink

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

The idea behind Eoptolink Technology and Ningbo Homelink Eco iTech 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.