Correlation Between Eastroc Beverage and State Grid

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

Diversification Opportunities for Eastroc Beverage and State Grid

-0.59

Correlation Coefficient

Eastroc Beverage  State Grid

Excellent diversification

The 3 months correlation between Eastroc and State is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and State Grid InformationCommunic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Grid Informati 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 State Grid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Grid Informati has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and State Grid go up and down completely randomly.

Pair Corralation between Eastroc Beverage and State Grid

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to under-perform the State Grid. In addition to that, Eastroc Beverage is 1.01 times more volatile than State Grid InformationCommunication. It trades about -0.03 of its total potential returns per unit of risk. State Grid InformationCommunication is currently generating about 0.0 per unit of volatility. If you would invest  1,950  in State Grid InformationCommunication on December 25, 2024 and sell it today you would lose (27.00) from holding State Grid InformationCommunication or give up 1.38% of portfolio value over 90 days.

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

Eastroc Beverage Group  vs.  State Grid InformationCommunic

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.

State Grid Informati

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Eastroc Beverage and State Grid

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

The idea behind Eastroc Beverage Group and State Grid InformationCommunication 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.