Correlation Between Cleanaway and Eastern Media

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

By analyzing existing cross correlation between Cleanaway Co and Eastern Media International, you can compare the effects of market volatilities on Cleanaway and Eastern Media 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 Cleanaway with a short position of Eastern Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleanaway and Eastern Media.

Diversification Opportunities for Cleanaway and Eastern Media

0.87

Correlation Coefficient

Cleanaway  Eastern Media

Very poor diversification

The 3 months correlation between Cleanaway and Eastern is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Co and Eastern Media International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Media Intern and Cleanaway 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 Cleanaway Co are associated (or correlated) with Eastern Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Media Intern has no effect on the direction of Cleanaway i.e., Cleanaway and Eastern Media go up and down completely randomly.

Pair Corralation between Cleanaway and Eastern Media

Assuming the 90 days trading horizon Cleanaway is expected to generate 1.44 times less return on investment than Eastern Media. But when comparing it to its historical volatility, Cleanaway Co is 3.47 times less risky than Eastern Media. It trades about 0.27 of its potential returns per unit of risk. Eastern Media International is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,660  in Eastern Media International on December 31, 2024 and sell it today you would earn a total of  175.00  from holding Eastern Media International or generate 10.54% return on investment over 90 days.

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

Cleanaway Co  vs.  Eastern Media International

Cleanaway

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cleanaway Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cleanaway may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Eastern Media Intern

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Media International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eastern Media may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Cleanaway and Eastern Media

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

The idea behind Cleanaway Co and Eastern Media 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.