Correlation Between Eaco Corp and Foxx Development

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

By analyzing existing cross correlation between Eaco Corp and Foxx Development Holdings, you can compare the effects of market volatilities on Eaco Corp and Foxx 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 Eaco Corp with a short position of Foxx Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eaco Corp and Foxx Development.

Diversification Opportunities for Eaco Corp and Foxx Development

-0.32

Correlation Coefficient

Eaco Corp  Foxx Development

Very good diversification

The 3 months correlation between Eaco and Foxx is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eaco Corp and Foxx Development Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxx Development Holdings and Eaco Corp 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 Eaco Corp are associated (or correlated) with Foxx Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxx Development Holdings has no effect on the direction of Eaco Corp i.e., Eaco Corp and Foxx Development go up and down completely randomly.

Pair Corralation between Eaco Corp and Foxx Development

If you would invest  12.00  in Foxx Development Holdings on September 24, 2024 and sell it today you would earn a total of  4.00  from holding Foxx Development Holdings or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Eaco Corp  vs.  Foxx Development Holdings

Eaco Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eaco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Eaco Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Foxx Development Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foxx Development Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Foxx Development showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eaco Corp and Foxx Development

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

The idea behind Eaco Corp and Foxx Development Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.