Correlation Between Eastwood Bio and Empire Company

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

By analyzing existing cross correlation between Eastwood Bio Medical Canada and Empire Company Limited, you can compare the effects of market volatilities on Eastwood Bio and Empire Company 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 Eastwood Bio with a short position of Empire Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio and Empire Company.

Diversification Opportunities for Eastwood Bio and Empire Company

-0.43

Correlation Coefficient

Eastwood Bio  Empire Company

Very good diversification

The 3 months correlation between Eastwood and Empire is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Empire Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Limited and Eastwood Bio 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 Eastwood Bio Medical Canada are associated (or correlated) with Empire Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Limited has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Empire Company go up and down completely randomly.

Pair Corralation between Eastwood Bio and Empire Company

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to under-perform the Empire Company. In addition to that, Eastwood Bio is 13.44 times more volatile than Empire Company Limited. It trades about -0.01 of its total potential returns per unit of risk. Empire Company Limited is currently generating about 0.13 per unit of volatility. If you would invest  4,078  in Empire Company Limited on October 10, 2024 and sell it today you would earn a total of  357.00  from holding Empire Company Limited or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Eastwood Bio Medical Canada  vs.  Empire Company Limited

Eastwood Bio Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastwood Bio Medical Canada has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Empire Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Empire Company Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Empire Company may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eastwood Bio and Empire Company

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

The idea behind Eastwood Bio Medical Canada and Empire Company Limited 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .