Correlation Between Eagle Cold and Chernan Metal

Can any of the company-specific risk be diversified away by investing in both Eagle Cold and Chernan Metal 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 Chernan Metal 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 Chernan Metal Industrial, you can compare the effects of market volatilities on Eagle Cold and Chernan Metal 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 Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Cold and Chernan Metal.

Diversification Opportunities for Eagle Cold and Chernan Metal

-0.28

Correlation Coefficient

Eagle Cold  Chernan Metal

Very good diversification

The 3 months correlation between Eagle and Chernan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Cold Storage and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial 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 Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Eagle Cold i.e., Eagle Cold and Chernan Metal go up and down completely randomly.

Pair Corralation between Eagle Cold and Chernan Metal

Assuming the 90 days trading horizon Eagle Cold Storage is expected to generate 0.53 times more return on investment than Chernan Metal. However, Eagle Cold Storage is 1.9 times less risky than Chernan Metal. It trades about 0.08 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about 0.01 per unit of risk. If you would invest  2,079  in Eagle Cold Storage on October 11, 2024 and sell it today you would earn a total of  1,081  from holding Eagle Cold Storage or generate 52.0% return on investment over 90 days.

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

Eagle Cold Storage  vs.  Chernan Metal Industrial

Eagle Cold Storage

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Cold Storage are ranked lower than 2 (%) 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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chernan Metal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chernan Metal Industrial 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 Chernan Metal

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

The idea behind Eagle Cold Storage and Chernan Metal Industrial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.