Correlation Between Est Global and ALFORMER Industrial

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

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

Diversification Opportunities for Est Global and ALFORMER Industrial

0.06

Correlation Coefficient

Est Global  ALFORMER Industrial

Significant diversification

The 3 months correlation between Est and ALFORMER is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Est Global Apparel and ALFORMER Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALFORMER Industrial and Est Global 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 Est Global Apparel are associated (or correlated) with ALFORMER Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALFORMER Industrial has no effect on the direction of Est Global i.e., Est Global and ALFORMER Industrial go up and down completely randomly.

Pair Corralation between Est Global and ALFORMER Industrial

Assuming the 90 days trading horizon Est Global Apparel is expected to generate 1.54 times more return on investment than ALFORMER Industrial. However, Est Global is 1.54 times more volatile than ALFORMER Industrial Co. It trades about -0.05 of its potential returns per unit of risk. ALFORMER Industrial Co is currently generating about -0.09 per unit of risk. If you would invest  1,800  in Est Global Apparel on October 11, 2024 and sell it today you would lose (110.00) from holding Est Global Apparel or give up 6.11% of portfolio value over 90 days.

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

Est Global Apparel  vs.  ALFORMER Industrial Co

Est Global Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Est Global Apparel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Est Global is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ALFORMER Industrial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALFORMER Industrial Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ALFORMER Industrial showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Est Global and ALFORMER Industrial

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

The idea behind Est Global Apparel and ALFORMER 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.