Correlation Between EAT WELL and COMMERCIAL VEHICLE

Can any of the company-specific risk be diversified away by investing in both EAT WELL and COMMERCIAL VEHICLE 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 EAT WELL and COMMERCIAL VEHICLE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EAT WELL INVESTMENT and COMMERCIAL VEHICLE, you can compare the effects of market volatilities on EAT WELL and COMMERCIAL VEHICLE 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 EAT WELL with a short position of COMMERCIAL VEHICLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAT WELL and COMMERCIAL VEHICLE.

Diversification Opportunities for EAT WELL and COMMERCIAL VEHICLE

0.0

Correlation Coefficient

EAT WELL  COMMERCIAL VEHICLE

Pay attention - limited upside

The 3 months correlation between EAT and COMMERCIAL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EAT WELL INVESTMENT and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE and EAT WELL 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 EAT WELL INVESTMENT are associated (or correlated) with COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of EAT WELL i.e., EAT WELL and COMMERCIAL VEHICLE go up and down completely randomly.

Pair Corralation between EAT WELL and COMMERCIAL VEHICLE

Assuming the 90 days trading horizon EAT WELL INVESTMENT is expected to generate 0.93 times more return on investment than COMMERCIAL VEHICLE. However, EAT WELL INVESTMENT is 1.07 times less risky than COMMERCIAL VEHICLE. It trades about -0.01 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.06 per unit of risk. If you would invest  16.00  in EAT WELL INVESTMENT on September 28, 2024 and sell it today you would lose (5.00) from holding EAT WELL INVESTMENT or give up 31.25% of portfolio value over 90 days.

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

EAT WELL INVESTMENT  vs.  COMMERCIAL VEHICLE

EAT WELL INVESTMENT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAT WELL INVESTMENT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, EAT WELL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

COMMERCIAL VEHICLE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMMERCIAL VEHICLE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EAT WELL and COMMERCIAL VEHICLE

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

The idea behind EAT WELL INVESTMENT and COMMERCIAL VEHICLE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.