Correlation Between East Side and Highwood Asset

Can any of the company-specific risk be diversified away by investing in both East Side and Highwood Asset 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 East Side and Highwood Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between East Side Games and Highwood Asset Management, you can compare the effects of market volatilities on East Side and Highwood Asset 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 East Side with a short position of Highwood Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Side and Highwood Asset.

Diversification Opportunities for East Side and Highwood Asset

-0.18

Correlation Coefficient

East Side  Highwood Asset

Good diversification

The 3 months correlation between East and Highwood is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding East Side Games and Highwood Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwood Asset Management and East Side 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 East Side Games are associated (or correlated) with Highwood Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwood Asset Management has no effect on the direction of East Side i.e., East Side and Highwood Asset go up and down completely randomly.

Pair Corralation between East Side and Highwood Asset

Assuming the 90 days trading horizon East Side Games is expected to generate 1.29 times more return on investment than Highwood Asset. However, East Side is 1.29 times more volatile than Highwood Asset Management. It trades about 0.0 of its potential returns per unit of risk. Highwood Asset Management is currently generating about -0.01 per unit of risk. If you would invest  86.00  in East Side Games on October 27, 2024 and sell it today you would lose (34.00) from holding East Side Games or give up 39.53% of portfolio value over 90 days.

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

East Side Games  vs.  Highwood Asset Management

East Side Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Highwood Asset Management

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Highwood Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Highwood Asset is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with East Side and Highwood Asset

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

The idea behind East Side Games and Highwood Asset Management 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.