Correlation Between EcoSynthetix and CI First

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

By analyzing existing cross correlation between EcoSynthetix and CI First Asset, you can compare the effects of market volatilities on EcoSynthetix and CI First 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 EcoSynthetix with a short position of CI First. Check out your portfolio center. Please also check ongoing floating volatility patterns of EcoSynthetix and CI First.

Diversification Opportunities for EcoSynthetix and CI First

0.81

Correlation Coefficient

EcoSynthetix  CI First

Very poor diversification

The 3 months correlation between EcoSynthetix and MXF is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding EcoSynthetix and CI First Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI First Asset and EcoSynthetix 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 EcoSynthetix are associated (or correlated) with CI First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI First Asset has no effect on the direction of EcoSynthetix i.e., EcoSynthetix and CI First go up and down completely randomly.

Pair Corralation between EcoSynthetix and CI First

Assuming the 90 days trading horizon EcoSynthetix is expected to generate 1.76 times more return on investment than CI First. However, EcoSynthetix is 1.76 times more volatile than CI First Asset. It trades about 0.32 of its potential returns per unit of risk. CI First Asset is currently generating about 0.25 per unit of risk. If you would invest  415.00  in EcoSynthetix on November 29, 2024 and sell it today you would earn a total of  80.00  from holding EcoSynthetix or generate 19.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

EcoSynthetix  vs.  CI First Asset

EcoSynthetix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EcoSynthetix are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, EcoSynthetix displayed solid returns over the last few months and may actually be approaching a breakup point.

CI First Asset

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI First Asset are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CI First displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EcoSynthetix and CI First

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

The idea behind EcoSynthetix and CI First Asset 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.