Correlation Between ECOVE Environment and Chung Fu

Can any of the company-specific risk be diversified away by investing in both ECOVE Environment and Chung Fu 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 ECOVE Environment and Chung Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ECOVE Environment Corp and Chung Fu Tex International, you can compare the effects of market volatilities on ECOVE Environment and Chung Fu 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 ECOVE Environment with a short position of Chung Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECOVE Environment and Chung Fu.

Diversification Opportunities for ECOVE Environment and Chung Fu

-0.4

Correlation Coefficient

ECOVE Environment  Chung Fu

Very good diversification

The 3 months correlation between ECOVE and Chung is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ECOVE Environment Corp and Chung Fu Tex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chung Fu Tex and ECOVE Environment 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 ECOVE Environment Corp are associated (or correlated) with Chung Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chung Fu Tex has no effect on the direction of ECOVE Environment i.e., ECOVE Environment and Chung Fu go up and down completely randomly.

Pair Corralation between ECOVE Environment and Chung Fu

Assuming the 90 days trading horizon ECOVE Environment Corp is expected to generate 0.21 times more return on investment than Chung Fu. However, ECOVE Environment Corp is 4.84 times less risky than Chung Fu. It trades about 0.01 of its potential returns per unit of risk. Chung Fu Tex International is currently generating about -0.05 per unit of risk. If you would invest  28,425  in ECOVE Environment Corp on October 22, 2024 and sell it today you would earn a total of  225.00  from holding ECOVE Environment Corp or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

ECOVE Environment Corp  vs.  Chung Fu Tex International

ECOVE Environment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECOVE Environment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ECOVE Environment is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chung Fu Tex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chung Fu Tex International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with ECOVE Environment and Chung Fu

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

The idea behind ECOVE Environment Corp and Chung Fu Tex International 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.