Correlation Between Eastern Commercial and Country Group

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

By analyzing existing cross correlation between Eastern Commercial Leasing and Country Group Holdings, you can compare the effects of market volatilities on Eastern Commercial and Country Group 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 Eastern Commercial with a short position of Country Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Commercial and Country Group.

Diversification Opportunities for Eastern Commercial and Country Group

0.6

Correlation Coefficient

Eastern Commercial  Country Group

Poor diversification

The 3 months correlation between Eastern and Country is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Commercial Leasing and Country Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Group Holdings and Eastern Commercial 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 Eastern Commercial Leasing are associated (or correlated) with Country Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Group Holdings has no effect on the direction of Eastern Commercial i.e., Eastern Commercial and Country Group go up and down completely randomly.

Pair Corralation between Eastern Commercial and Country Group

Assuming the 90 days trading horizon Eastern Commercial Leasing is expected to under-perform the Country Group. In addition to that, Eastern Commercial is 1.89 times more volatile than Country Group Holdings. It trades about -0.11 of its total potential returns per unit of risk. Country Group Holdings is currently generating about -0.16 per unit of volatility. If you would invest  69.00  in Country Group Holdings on October 26, 2024 and sell it today you would lose (11.00) from holding Country Group Holdings or give up 15.94% of portfolio value over 90 days.

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

Eastern Commercial Leasing  vs.  Country Group Holdings

Eastern Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Commercial Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Country Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Eastern Commercial and Country Group

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

The idea behind Eastern Commercial Leasing and Country Group Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.