Correlation Between Eastwood Bio and Lassonde Industries

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

Diversification Opportunities for Eastwood Bio and Lassonde Industries

-0.17

Correlation Coefficient

Eastwood Bio  Lassonde Industries

Good diversification

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

Pair Corralation between Eastwood Bio and Lassonde Industries

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to under-perform the Lassonde Industries. In addition to that, Eastwood Bio is 8.69 times more volatile than Lassonde Industries. It trades about -0.1 of its total potential returns per unit of risk. Lassonde Industries is currently generating about 0.04 per unit of volatility. If you would invest  17,585  in Lassonde Industries on September 22, 2024 and sell it today you would earn a total of  125.00  from holding Lassonde Industries or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Eastwood Bio Medical Canada  vs.  Lassonde Industries

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 fairly stable basic indicators, Eastwood Bio is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lassonde Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lassonde Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lassonde Industries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eastwood Bio and Lassonde Industries

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

The idea behind Eastwood Bio Medical Canada and Lassonde Industries 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.