Correlation Between American Security and Eco Wave

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

By analyzing existing cross correlation between American Security Resources and Eco Wave Power, you can compare the effects of market volatilities on American Security and Eco Wave 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 American Security with a short position of Eco Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Security and Eco Wave.

Diversification Opportunities for American Security and Eco Wave

0.0

Correlation Coefficient

American Security  Eco Wave

Pay attention - limited upside

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

Pair Corralation between American Security and Eco Wave

If you would invest  386.00  in Eco Wave Power on September 2, 2024 and sell it today you would earn a total of  601.00  from holding Eco Wave Power or generate 155.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

American Security Resources  vs.  Eco Wave Power

American Security

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Security Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, American Security is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Eco Wave Power

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Wave Power are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Eco Wave exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Security and Eco Wave

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

The idea behind American Security Resources and Eco Wave Power 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.