Correlation Between Eagle Cold and GenMont Biotech

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

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

Diversification Opportunities for Eagle Cold and GenMont Biotech

-0.19

Correlation Coefficient

Eagle Cold  GenMont Biotech

Good diversification

The 3 months correlation between Eagle and GenMont is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Cold Storage and GenMont Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GenMont Biotech and Eagle Cold 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 Eagle Cold Storage are associated (or correlated) with GenMont Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GenMont Biotech has no effect on the direction of Eagle Cold i.e., Eagle Cold and GenMont Biotech go up and down completely randomly.

Pair Corralation between Eagle Cold and GenMont Biotech

Assuming the 90 days trading horizon Eagle Cold Storage is expected to generate 0.72 times more return on investment than GenMont Biotech. However, Eagle Cold Storage is 1.39 times less risky than GenMont Biotech. It trades about 0.14 of its potential returns per unit of risk. GenMont Biotech is currently generating about -0.04 per unit of risk. If you would invest  3,105  in Eagle Cold Storage on October 23, 2024 and sell it today you would earn a total of  55.00  from holding Eagle Cold Storage or generate 1.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Eagle Cold Storage  vs.  GenMont Biotech

Eagle Cold Storage

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Cold Storage are ranked lower than 1 (%) 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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GenMont Biotech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GenMont Biotech 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 Eagle Cold and GenMont Biotech

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

The idea behind Eagle Cold Storage and GenMont Biotech 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.