Correlation Between EcoSynthetix and Pentagon I

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

By analyzing existing cross correlation between EcoSynthetix and Pentagon I Capital, you can compare the effects of market volatilities on EcoSynthetix and Pentagon I 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 Pentagon I. Check out your portfolio center. Please also check ongoing floating volatility patterns of EcoSynthetix and Pentagon I.

Diversification Opportunities for EcoSynthetix and Pentagon I

0.18

Correlation Coefficient

EcoSynthetix  Pentagon I

Average diversification

The 3 months correlation between EcoSynthetix and Pentagon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding EcoSynthetix and Pentagon I Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pentagon I Capital 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 Pentagon I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pentagon I Capital has no effect on the direction of EcoSynthetix i.e., EcoSynthetix and Pentagon I go up and down completely randomly.

Pair Corralation between EcoSynthetix and Pentagon I

Assuming the 90 days trading horizon EcoSynthetix is expected to generate 1.94 times less return on investment than Pentagon I. But when comparing it to its historical volatility, EcoSynthetix is 2.95 times less risky than Pentagon I. It trades about 0.02 of its potential returns per unit of risk. Pentagon I Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Pentagon I Capital on October 5, 2024 and sell it today you would lose (5.00) from holding Pentagon I Capital or give up 62.5% of portfolio value over 90 days.

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

EcoSynthetix  vs.  Pentagon I Capital

EcoSynthetix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EcoSynthetix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pentagon I Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EcoSynthetix and Pentagon I

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

The idea behind EcoSynthetix and Pentagon I Capital 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.