Correlation Between ECHO INVESTMENT and Apple

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

By analyzing existing cross correlation between ECHO INVESTMENT ZY and Apple Inc, you can compare the effects of market volatilities on ECHO INVESTMENT and Apple 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 ECHO INVESTMENT with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and Apple.

Diversification Opportunities for ECHO INVESTMENT and Apple

0.71

Correlation Coefficient

ECHO INVESTMENT  Apple

Poor diversification

The 3 months correlation between ECHO and Apple is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and ECHO 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 ECHO INVESTMENT ZY are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and Apple go up and down completely randomly.

Pair Corralation between ECHO INVESTMENT and Apple

Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 1.08 times more return on investment than Apple. However, ECHO INVESTMENT is 1.08 times more volatile than Apple Inc. It trades about -0.08 of its potential returns per unit of risk. Apple Inc is currently generating about -0.43 per unit of risk. If you would invest  109.00  in ECHO INVESTMENT ZY on October 22, 2024 and sell it today you would lose (2.00) from holding ECHO INVESTMENT ZY or give up 1.83% of portfolio value over 90 days.

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

ECHO INVESTMENT ZY  vs.  Apple Inc

ECHO INVESTMENT ZY

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ECHO INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Apple Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Apple is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with ECHO INVESTMENT and Apple

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

The idea behind ECHO INVESTMENT ZY and Apple Inc 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.