Correlation Between Eddy Smart and Themac Resources

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

By analyzing existing cross correlation between Eddy Smart Home and Themac Resources Group, you can compare the effects of market volatilities on Eddy Smart and Themac Resources 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 Eddy Smart with a short position of Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eddy Smart and Themac Resources.

Diversification Opportunities for Eddy Smart and Themac Resources

0.03

Correlation Coefficient

Eddy Smart  Themac Resources

Significant diversification

The 3 months correlation between Eddy and Themac is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Eddy Smart Home and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and Eddy Smart 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 Eddy Smart Home are associated (or correlated) with Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Eddy Smart i.e., Eddy Smart and Themac Resources go up and down completely randomly.

Pair Corralation between Eddy Smart and Themac Resources

Assuming the 90 days horizon Eddy Smart is expected to generate 1.21 times less return on investment than Themac Resources. In addition to that, Eddy Smart is 1.57 times more volatile than Themac Resources Group. It trades about 0.16 of its total potential returns per unit of risk. Themac Resources Group is currently generating about 0.31 per unit of volatility. If you would invest  3.50  in Themac Resources Group on October 22, 2024 and sell it today you would earn a total of  1.50  from holding Themac Resources Group or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Eddy Smart Home  vs.  Themac Resources Group

Eddy Smart Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eddy Smart Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Eddy Smart is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Themac Resources

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eddy Smart and Themac Resources

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

The idea behind Eddy Smart Home and Themac Resources Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..