Correlation Between EEducation Albert and Hitech Development

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

By analyzing existing cross correlation between eEducation Albert AB and Hitech Development Wireless, you can compare the effects of market volatilities on EEducation Albert and Hitech Development 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 EEducation Albert with a short position of Hitech Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of EEducation Albert and Hitech Development.

Diversification Opportunities for EEducation Albert and Hitech Development

0.68

Correlation Coefficient

EEducation Albert  Hitech Development

Poor diversification

The 3 months correlation between EEducation and Hitech is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding eEducation Albert AB and Hitech Development Wireless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitech Development and EEducation Albert 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 eEducation Albert AB are associated (or correlated) with Hitech Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitech Development has no effect on the direction of EEducation Albert i.e., EEducation Albert and Hitech Development go up and down completely randomly.

Pair Corralation between EEducation Albert and Hitech Development

Assuming the 90 days trading horizon eEducation Albert AB is expected to generate 0.2 times more return on investment than Hitech Development. However, eEducation Albert AB is 4.89 times less risky than Hitech Development. It trades about -0.96 of its potential returns per unit of risk. Hitech Development Wireless is currently generating about -0.28 per unit of risk. If you would invest  361.00  in eEducation Albert AB on October 5, 2024 and sell it today you would lose (94.00) from holding eEducation Albert AB or give up 26.04% of portfolio value over 90 days.

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

eEducation Albert AB  vs.  Hitech Development Wireless

eEducation Albert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eEducation Albert AB 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 fundamental drivers 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.

Hitech Development

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Hitech Development Wireless has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, Hitech Development unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EEducation Albert and Hitech Development

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

The idea behind eEducation Albert AB and Hitech Development Wireless 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.