Correlation Between Trade Van and Eagle Cold

Can any of the company-specific risk be diversified away by investing in both Trade Van and Eagle Cold 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 Trade Van and Eagle Cold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trade Van Information Services and Eagle Cold Storage, you can compare the effects of market volatilities on Trade Van and Eagle Cold 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 Trade Van with a short position of Eagle Cold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and Eagle Cold.

Diversification Opportunities for Trade Van and Eagle Cold

-0.53

Correlation Coefficient

Trade Van  Eagle Cold

Excellent diversification

The 3 months correlation between Trade and Eagle is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services and Eagle Cold Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Cold Storage and Trade Van 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 Trade Van Information Services are associated (or correlated) with Eagle Cold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Cold Storage has no effect on the direction of Trade Van i.e., Trade Van and Eagle Cold go up and down completely randomly.

Pair Corralation between Trade Van and Eagle Cold

Assuming the 90 days trading horizon Trade Van is expected to generate 1.61 times less return on investment than Eagle Cold. But when comparing it to its historical volatility, Trade Van Information Services is 1.3 times less risky than Eagle Cold. It trades about 0.2 of its potential returns per unit of risk. Eagle Cold Storage is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  2,910  in Eagle Cold Storage on September 15, 2024 and sell it today you would earn a total of  215.00  from holding Eagle Cold Storage or generate 7.39% return on investment over 90 days.

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

Trade Van Information Services  vs.  Eagle Cold Storage

Trade Van Information

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Van Information Services are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Trade Van may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eagle Cold Storage

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Cold Storage are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Eagle Cold is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Trade Van and Eagle Cold

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

The idea behind Trade Van Information Services and Eagle Cold Storage 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.