Correlation Between National Silicon and Eastroc Beverage

Can any of the company-specific risk be diversified away by investing in both National Silicon and Eastroc Beverage 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 National Silicon and Eastroc Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Silicon Industry and Eastroc Beverage Group, you can compare the effects of market volatilities on National Silicon and Eastroc Beverage 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 National Silicon with a short position of Eastroc Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Silicon and Eastroc Beverage.

Diversification Opportunities for National Silicon and Eastroc Beverage

-0.11

Correlation Coefficient

National Silicon  Eastroc Beverage

Good diversification

The 3 months correlation between National and Eastroc is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Silicon Industry and Eastroc Beverage Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastroc Beverage and National Silicon 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 National Silicon Industry are associated (or correlated) with Eastroc Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastroc Beverage has no effect on the direction of National Silicon i.e., National Silicon and Eastroc Beverage go up and down completely randomly.

Pair Corralation between National Silicon and Eastroc Beverage

Assuming the 90 days trading horizon National Silicon Industry is expected to under-perform the Eastroc Beverage. In addition to that, National Silicon is 1.57 times more volatile than Eastroc Beverage Group. It trades about -0.15 of its total potential returns per unit of risk. Eastroc Beverage Group is currently generating about 0.17 per unit of volatility. If you would invest  21,736  in Eastroc Beverage Group on October 7, 2024 and sell it today you would earn a total of  2,904  from holding Eastroc Beverage Group or generate 13.36% return on investment over 90 days.

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

National Silicon Industry  vs.  Eastroc Beverage Group

National Silicon Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Silicon Industry 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.

Eastroc Beverage

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastroc Beverage Group are ranked lower than 8 (%) 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.

Pair Trading with National Silicon and Eastroc Beverage

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

The idea behind National Silicon Industry and Eastroc Beverage Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.