Correlation Between Eastroc Beverage and Shandong Iron

Can any of the company-specific risk be diversified away by investing in both Eastroc Beverage and Shandong Iron 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 Shandong Iron 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 Shandong Iron and, you can compare the effects of market volatilities on Eastroc Beverage and Shandong Iron 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 Shandong Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastroc Beverage and Shandong Iron.

Diversification Opportunities for Eastroc Beverage and Shandong Iron

0.16

Correlation Coefficient

Eastroc Beverage  Shandong Iron

Average diversification

The 3 months correlation between Eastroc and Shandong is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and Shandong Iron and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Iron 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 Shandong Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Iron has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and Shandong Iron go up and down completely randomly.

Pair Corralation between Eastroc Beverage and Shandong Iron

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to generate 1.6 times more return on investment than Shandong Iron. However, Eastroc Beverage is 1.6 times more volatile than Shandong Iron and. It trades about -0.03 of its potential returns per unit of risk. Shandong Iron and is currently generating about -0.07 per unit of risk. If you would invest  24,163  in Eastroc Beverage Group on December 26, 2024 and sell it today you would lose (1,410) from holding Eastroc Beverage Group or give up 5.84% of portfolio value over 90 days.

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

Eastroc Beverage Group  vs.  Shandong Iron and

Eastroc Beverage

Risk-Adjusted Performance

Very Weak

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

Shandong Iron

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shandong Iron and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eastroc Beverage and Shandong Iron

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

The idea behind Eastroc Beverage Group and Shandong Iron and 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.