Correlation Between Eastwood Bio and Guru Organic

Can any of the company-specific risk be diversified away by investing in both Eastwood Bio and Guru Organic 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 Guru Organic 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 Guru Organic Energy, you can compare the effects of market volatilities on Eastwood Bio and Guru Organic 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 Guru Organic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio and Guru Organic.

Diversification Opportunities for Eastwood Bio and Guru Organic

0.34

Correlation Coefficient

Eastwood Bio  Guru Organic

Weak diversification

The 3 months correlation between Eastwood and Guru is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Guru Organic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guru Organic Energy 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 Guru Organic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guru Organic Energy has no effect on the direction of Eastwood Bio i.e., Eastwood Bio and Guru Organic go up and down completely randomly.

Pair Corralation between Eastwood Bio and Guru Organic

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to generate 1.98 times more return on investment than Guru Organic. However, Eastwood Bio is 1.98 times more volatile than Guru Organic Energy. It trades about -0.07 of its potential returns per unit of risk. Guru Organic Energy is currently generating about -0.28 per unit of risk. If you would invest  75.00  in Eastwood Bio Medical Canada on October 1, 2024 and sell it today you would lose (12.00) from holding Eastwood Bio Medical Canada or give up 16.0% of portfolio value over 90 days.

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

Eastwood Bio Medical Canada  vs.  Guru Organic Energy

Eastwood Bio Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastwood Bio Medical Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Eastwood Bio showed solid returns over the last few months and may actually be approaching a breakup point.

Guru Organic Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guru Organic Energy 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eastwood Bio and Guru Organic

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

The idea behind Eastwood Bio Medical Canada and Guru Organic Energy 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.