Correlation Between Eastnine and L E

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

By analyzing existing cross correlation between Eastnine AB and L E Lundbergfretagen, you can compare the effects of market volatilities on Eastnine and L E 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 Eastnine with a short position of L E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastnine and L E.

Diversification Opportunities for Eastnine and L E

0.1

Correlation Coefficient

Eastnine  L E

Average diversification

The 3 months correlation between Eastnine and LUND-B is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Eastnine AB and L E Lundbergfretagen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L E Lundbergfretagen and Eastnine 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 Eastnine AB are associated (or correlated) with L E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L E Lundbergfretagen has no effect on the direction of Eastnine i.e., Eastnine and L E go up and down completely randomly.

Pair Corralation between Eastnine and L E

Assuming the 90 days trading horizon Eastnine AB is expected to generate 1.88 times more return on investment than L E. However, Eastnine is 1.88 times more volatile than L E Lundbergfretagen. It trades about -0.04 of its potential returns per unit of risk. L E Lundbergfretagen is currently generating about -0.21 per unit of risk. If you would invest  4,850  in Eastnine AB on October 11, 2024 and sell it today you would lose (211.00) from holding Eastnine AB or give up 4.35% of portfolio value over 90 days.

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

Eastnine AB  vs.  L E Lundbergfretagen

Eastnine AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

L E Lundbergfretagen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days L E Lundbergfretagen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eastnine and L E

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

The idea behind Eastnine AB and L E Lundbergfretagen 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.