Correlation Between Eastinco Mining and Pressure Technologies

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

By analyzing existing cross correlation between Eastinco Mining Exploration and Pressure Technologies Plc, you can compare the effects of market volatilities on Eastinco Mining and Pressure Technologies 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 Eastinco Mining with a short position of Pressure Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastinco Mining and Pressure Technologies.

Diversification Opportunities for Eastinco Mining and Pressure Technologies

-0.67

Correlation Coefficient

Eastinco Mining  Pressure Technologies

Excellent diversification

The 3 months correlation between Eastinco and Pressure is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eastinco Mining Exploration and Pressure Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Technologies Plc and Eastinco Mining 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 Eastinco Mining Exploration are associated (or correlated) with Pressure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Technologies Plc has no effect on the direction of Eastinco Mining i.e., Eastinco Mining and Pressure Technologies go up and down completely randomly.

Pair Corralation between Eastinco Mining and Pressure Technologies

Assuming the 90 days trading horizon Eastinco Mining Exploration is expected to generate 105.83 times more return on investment than Pressure Technologies. However, Eastinco Mining is 105.83 times more volatile than Pressure Technologies Plc. It trades about 0.27 of its potential returns per unit of risk. Pressure Technologies Plc is currently generating about 0.01 per unit of risk. If you would invest  8,500  in Eastinco Mining Exploration on October 11, 2024 and sell it today you would lose (3,800) from holding Eastinco Mining Exploration or give up 44.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.3%
Values	Daily Returns

Eastinco Mining Exploration  vs.  Pressure Technologies Plc

Eastinco Mining Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastinco Mining Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pressure Technologies Plc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pressure Technologies Plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Pressure Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastinco Mining and Pressure Technologies

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

The idea behind Eastinco Mining Exploration and Pressure Technologies Plc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.