Correlation Between Easton Pharmaceutica and Red Light

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

By analyzing existing cross correlation between Easton Pharmaceutica and Red Light Holland, you can compare the effects of market volatilities on Easton Pharmaceutica and Red Light 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 Easton Pharmaceutica with a short position of Red Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easton Pharmaceutica and Red Light.

Diversification Opportunities for Easton Pharmaceutica and Red Light

0.0

Correlation Coefficient

Easton Pharmaceutica  Red Light

Pay attention - limited upside

The 3 months correlation between Easton and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Easton Pharmaceutica and Red Light Holland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Light Holland and Easton Pharmaceutica 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 Easton Pharmaceutica are associated (or correlated) with Red Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Light Holland has no effect on the direction of Easton Pharmaceutica i.e., Easton Pharmaceutica and Red Light go up and down completely randomly.

Pair Corralation between Easton Pharmaceutica and Red Light

If you would invest  0.01  in Easton Pharmaceutica on December 19, 2024 and sell it today you would earn a total of  0.00  from holding Easton Pharmaceutica or generate 0.0% return on investment over 90 days.

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

Easton Pharmaceutica  vs.  Red Light Holland

Easton Pharmaceutica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Easton Pharmaceutica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Easton Pharmaceutica is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Red Light Holland

Risk-Adjusted Performance

Very Weak

Over the last 90 days Red Light Holland has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental 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 Easton Pharmaceutica and Red Light

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

The idea behind Easton Pharmaceutica and Red Light Holland 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 Global Correlations module to find global opportunities by holding instruments from different markets.