Correlation Between Eastinco Mining and Pearson PLC

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

Diversification Opportunities for Eastinco Mining and Pearson PLC

0.11

Correlation Coefficient

Eastinco Mining  Pearson PLC

Average diversification

The 3 months correlation between Eastinco and Pearson is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Eastinco Mining Exploration and Pearson PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson 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 Pearson PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson PLC has no effect on the direction of Eastinco Mining i.e., Eastinco Mining and Pearson PLC go up and down completely randomly.

Pair Corralation between Eastinco Mining and Pearson PLC

Assuming the 90 days trading horizon Eastinco Mining is expected to generate 1.97 times less return on investment than Pearson PLC. In addition to that, Eastinco Mining is 1.72 times more volatile than Pearson PLC. It trades about 0.09 of its total potential returns per unit of risk. Pearson PLC is currently generating about 0.3 per unit of volatility. If you would invest  104,300  in Pearson PLC on October 25, 2024 and sell it today you would earn a total of  24,450  from holding Pearson PLC or generate 23.44% return on investment over 90 days.

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

Eastinco Mining Exploration  vs.  Pearson PLC

Eastinco Mining Expl

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastinco Mining Exploration are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Eastinco Mining may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pearson PLC

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pearson PLC are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pearson PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastinco Mining and Pearson PLC

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

The idea behind Eastinco Mining Exploration and Pearson 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 Commodity Directory module to find actively traded commodities issued by global exchanges.