Correlation Between Eastern Air and Silkroad Visual

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

By analyzing existing cross correlation between Eastern Air Logistics and Silkroad Visual Technology, you can compare the effects of market volatilities on Eastern Air and Silkroad Visual 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 Eastern Air with a short position of Silkroad Visual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Air and Silkroad Visual.

Diversification Opportunities for Eastern Air and Silkroad Visual

-0.12

Correlation Coefficient

Eastern Air  Silkroad Visual

Good diversification

The 3 months correlation between Eastern and Silkroad is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Air Logistics and Silkroad Visual Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkroad Visual Tech and Eastern Air 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 Eastern Air Logistics are associated (or correlated) with Silkroad Visual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkroad Visual Tech has no effect on the direction of Eastern Air i.e., Eastern Air and Silkroad Visual go up and down completely randomly.

Pair Corralation between Eastern Air and Silkroad Visual

Assuming the 90 days trading horizon Eastern Air Logistics is expected to generate 0.31 times more return on investment than Silkroad Visual. However, Eastern Air Logistics is 3.24 times less risky than Silkroad Visual. It trades about 0.17 of its potential returns per unit of risk. Silkroad Visual Technology is currently generating about -0.21 per unit of risk. If you would invest  1,593  in Eastern Air Logistics on October 11, 2024 and sell it today you would earn a total of  100.00  from holding Eastern Air Logistics or generate 6.28% return on investment over 90 days.

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

Eastern Air Logistics  vs.  Silkroad Visual Technology

Eastern Air Logistics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Air Logistics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eastern Air is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Silkroad Visual Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eastern Air and Silkroad Visual

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

The idea behind Eastern Air Logistics and Silkroad Visual Technology 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..