Correlation Between Ecotel Communication and Boston Properties

Can any of the company-specific risk be diversified away by investing in both Ecotel Communication and Boston Properties 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 Ecotel Communication and Boston Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ecotel communication ag and Boston Properties, you can compare the effects of market volatilities on Ecotel Communication and Boston Properties 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 Ecotel Communication with a short position of Boston Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecotel Communication and Boston Properties.

Diversification Opportunities for Ecotel Communication and Boston Properties

-0.26

Correlation Coefficient

Ecotel Communication  Boston Properties

Very good diversification

The 3 months correlation between Ecotel and Boston is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag and Boston Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Properties and Ecotel Communication 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 ecotel communication ag are associated (or correlated) with Boston Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Properties has no effect on the direction of Ecotel Communication i.e., Ecotel Communication and Boston Properties go up and down completely randomly.

Pair Corralation between Ecotel Communication and Boston Properties

Assuming the 90 days trading horizon ecotel communication ag is expected to generate 0.72 times more return on investment than Boston Properties. However, ecotel communication ag is 1.4 times less risky than Boston Properties. It trades about 0.01 of its potential returns per unit of risk. Boston Properties is currently generating about -0.03 per unit of risk. If you would invest  1,360  in ecotel communication ag on October 25, 2024 and sell it today you would earn a total of  0.00  from holding ecotel communication ag or generate 0.0% return on investment over 90 days.

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

ecotel communication ag  vs.  Boston Properties

ecotel communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ecotel communication ag has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Ecotel Communication is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Boston Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boston Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ecotel Communication and Boston Properties

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

The idea behind ecotel communication ag and Boston Properties 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.