Correlation Between Eco5tech and Echo Investment

Can any of the company-specific risk be diversified away by investing in both Eco5tech and Echo Investment 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 Eco5tech and Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between eco5tech SA and Echo Investment SA, you can compare the effects of market volatilities on Eco5tech and Echo Investment 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 Eco5tech with a short position of Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco5tech and Echo Investment.

Diversification Opportunities for Eco5tech and Echo Investment

-0.12

Correlation Coefficient

Eco5tech  Echo Investment

Good diversification

The 3 months correlation between Eco5tech and Echo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding eco5tech SA and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment SA and Eco5tech 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 eco5tech SA are associated (or correlated) with Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of Eco5tech i.e., Eco5tech and Echo Investment go up and down completely randomly.

Pair Corralation between Eco5tech and Echo Investment

Assuming the 90 days trading horizon eco5tech SA is expected to under-perform the Echo Investment. In addition to that, Eco5tech is 2.93 times more volatile than Echo Investment SA. It trades about 0.0 of its total potential returns per unit of risk. Echo Investment SA is currently generating about 0.06 per unit of volatility. If you would invest  309.00  in Echo Investment SA on October 10, 2024 and sell it today you would earn a total of  158.00  from holding Echo Investment SA or generate 51.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.02%
Values	Daily Returns

eco5tech SA  vs.  Echo Investment SA

eco5tech SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eco5tech SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Eco5tech reported solid returns over the last few months and may actually be approaching a breakup point.

Echo Investment SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Echo Investment SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Echo Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Eco5tech and Echo Investment

The main advantage of trading using opposite Eco5tech and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco5tech position performs unexpectedly, Echo Investment 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 Echo Investment will offset losses from the drop in Echo Investment's long position.

The idea behind eco5tech SA and Echo Investment SA 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.