Correlation Between Eastroc Beverage and SI TECH

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

By analyzing existing cross correlation between Eastroc Beverage Group and SI TECH Information Technology, you can compare the effects of market volatilities on Eastroc Beverage and SI TECH 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 Eastroc Beverage with a short position of SI TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and SI TECH.

Diversification Opportunities for Eastroc Beverage and SI TECH

-0.14

Correlation Coefficient

Eastroc Beverage  SI TECH

Good diversification

The 3 months correlation between Eastroc and 300608 is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and SI TECH Information Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SI TECH Information and Eastroc Beverage 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 Eastroc Beverage Group are associated (or correlated) with SI TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SI TECH Information has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and SI TECH go up and down completely randomly.

Pair Corralation between Eastroc Beverage and SI TECH

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to generate 0.43 times more return on investment than SI TECH. However, Eastroc Beverage Group is 2.31 times less risky than SI TECH. It trades about 0.14 of its potential returns per unit of risk. SI TECH Information Technology is currently generating about -0.01 per unit of risk. If you would invest  13,138  in Eastroc Beverage Group on October 6, 2024 and sell it today you would earn a total of  11,502  from holding Eastroc Beverage Group or generate 87.55% return on investment over 90 days.

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

Eastroc Beverage Group  vs.  SI TECH Information Technology

Eastroc Beverage

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eastroc Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

SI TECH Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SI TECH Information Technology 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.

Pair Trading with Eastroc Beverage and SI TECH

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

The idea behind Eastroc Beverage Group and SI TECH Information 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.