Correlation Between Linktel Technologies and Eastern Communications

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

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

Diversification Opportunities for Linktel Technologies and Eastern Communications

0.52

Correlation Coefficient

Linktel Technologies  Eastern Communications

Very weak diversification

The 3 months correlation between Linktel and Eastern is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Linktel Technologies Co and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications and Linktel Technologies 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 Linktel Technologies Co are associated (or correlated) with Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of Linktel Technologies i.e., Linktel Technologies and Eastern Communications go up and down completely randomly.

Pair Corralation between Linktel Technologies and Eastern Communications

Assuming the 90 days trading horizon Linktel Technologies Co is expected to generate 2.03 times more return on investment than Eastern Communications. However, Linktel Technologies is 2.03 times more volatile than Eastern Communications Co. It trades about 0.0 of its potential returns per unit of risk. Eastern Communications Co is currently generating about 0.0 per unit of risk. If you would invest  9,470  in Linktel Technologies Co on October 5, 2024 and sell it today you would lose (2,450) from holding Linktel Technologies Co or give up 25.87% of portfolio value over 90 days.

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

Linktel Technologies Co  vs.  Eastern Communications Co

Linktel Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eastern Communications

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Linktel Technologies and Eastern Communications

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

The idea behind Linktel Technologies Co and Eastern Communications 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.