Correlation Between Eit Environmental and Everjoy Health

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

By analyzing existing cross correlation between Eit Environmental Development and Everjoy Health Group, you can compare the effects of market volatilities on Eit Environmental and Everjoy Health 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 Eit Environmental with a short position of Everjoy Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eit Environmental and Everjoy Health.

Diversification Opportunities for Eit Environmental and Everjoy Health

0.56

Correlation Coefficient

Eit Environmental  Everjoy Health

Very weak diversification

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

Pair Corralation between Eit Environmental and Everjoy Health

Assuming the 90 days trading horizon Eit Environmental Development is expected to under-perform the Everjoy Health. But the stock apears to be less risky and, when comparing its historical volatility, Eit Environmental Development is 1.74 times less risky than Everjoy Health. The stock trades about -0.01 of its potential returns per unit of risk. The Everjoy Health Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Everjoy Health Group on December 4, 2024 and sell it today you would earn a total of  35.00  from holding Everjoy Health Group or generate 9.23% return on investment over 90 days.

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

Eit Environmental Development  vs.  Everjoy Health Group

Eit Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eit Environmental Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eit Environmental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Everjoy Health Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Everjoy Health Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Everjoy Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eit Environmental and Everjoy Health

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

The idea behind Eit Environmental Development and Everjoy Health Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.