Correlation Between Eastroc Beverage and IRay Technology

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

Diversification Opportunities for Eastroc Beverage and IRay Technology

-0.08

Correlation Coefficient

Eastroc Beverage  IRay Technology

Good diversification

The 3 months correlation between Eastroc and IRay is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Eastroc Beverage Group and iRay Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iRay Technology 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 IRay Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iRay Technology has no effect on the direction of Eastroc Beverage i.e., Eastroc Beverage and IRay Technology go up and down completely randomly.

Pair Corralation between Eastroc Beverage and IRay Technology

Assuming the 90 days trading horizon Eastroc Beverage Group is expected to generate 0.61 times more return on investment than IRay Technology. However, Eastroc Beverage Group is 1.65 times less risky than IRay Technology. It trades about 0.12 of its potential returns per unit of risk. iRay Technology Co is currently generating about -0.22 per unit of risk. If you would invest  21,750  in Eastroc Beverage Group on October 3, 2024 and sell it today you would earn a total of  3,102  from holding Eastroc Beverage Group or generate 14.26% 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.  iRay Technology Co

Eastroc Beverage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 9 (%) 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.

iRay Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iRay Technology Co 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 IRay Technology

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

The idea behind Eastroc Beverage Group and iRay Technology Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.