Correlation Between Eco Animal and First

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

By analyzing existing cross correlation between Eco Animal Health and First Class Metals, you can compare the effects of market volatilities on Eco Animal and First 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 Eco Animal with a short position of First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco Animal and First.

Diversification Opportunities for Eco Animal and First

-0.17

Correlation Coefficient

Eco Animal  First

Good diversification

The 3 months correlation between Eco and First is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eco Animal Health and First Class Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Class Metals and Eco Animal 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 Eco Animal Health are associated (or correlated) with First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Class Metals has no effect on the direction of Eco Animal i.e., Eco Animal and First go up and down completely randomly.

Pair Corralation between Eco Animal and First

Assuming the 90 days trading horizon Eco Animal Health is expected to generate 0.34 times more return on investment than First. However, Eco Animal Health is 2.98 times less risky than First. It trades about -0.11 of its potential returns per unit of risk. First Class Metals is currently generating about -0.25 per unit of risk. If you would invest  7,050  in Eco Animal Health on October 11, 2024 and sell it today you would lose (200.00) from holding Eco Animal Health or give up 2.84% of portfolio value over 90 days.

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

Eco Animal Health  vs.  First Class Metals

Eco Animal Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Animal Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eco Animal is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

First Class Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Class Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Eco Animal and First

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

The idea behind Eco Animal Health and First Class Metals 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.

Check out your portfolio center.

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 Valuation module to check real value of public entities based on technical and fundamental data.