Correlation Between ECONET WIRELESS and Cass Saddle

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

By analyzing existing cross correlation between ECONET WIRELESS HOLDINGS and Cass Saddle Agriculture, you can compare the effects of market volatilities on ECONET WIRELESS and Cass Saddle 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 ECONET WIRELESS with a short position of Cass Saddle. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECONET WIRELESS and Cass Saddle.

Diversification Opportunities for ECONET WIRELESS and Cass Saddle

0.39

Correlation Coefficient

ECONET WIRELESS  Cass Saddle

Weak diversification

The 3 months correlation between ECONET and Cass is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding ECONET WIRELESS HOLDINGS and Cass Saddle Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Saddle Agriculture and ECONET WIRELESS 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 ECONET WIRELESS HOLDINGS are associated (or correlated) with Cass Saddle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Saddle Agriculture has no effect on the direction of ECONET WIRELESS i.e., ECONET WIRELESS and Cass Saddle go up and down completely randomly.

Pair Corralation between ECONET WIRELESS and Cass Saddle

Assuming the 90 days trading horizon ECONET WIRELESS is expected to generate 3.18 times less return on investment than Cass Saddle. But when comparing it to its historical volatility, ECONET WIRELESS HOLDINGS is 1.05 times less risky than Cass Saddle. It trades about 0.08 of its potential returns per unit of risk. Cass Saddle Agriculture is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Cass Saddle Agriculture on December 21, 2024 and sell it today you would earn a total of  401.00  from holding Cass Saddle Agriculture or generate 80.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

ECONET WIRELESS HOLDINGS  vs.  Cass Saddle Agriculture

ECONET WIRELESS HOLDINGS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ECONET WIRELESS HOLDINGS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, ECONET WIRELESS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cass Saddle Agriculture

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Saddle Agriculture are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Cass Saddle showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ECONET WIRELESS and Cass Saddle

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

The idea behind ECONET WIRELESS HOLDINGS and Cass Saddle Agriculture 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.