Correlation Between Eestech and Dr Foods

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

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

Diversification Opportunities for Eestech and Dr Foods

0.0

Correlation Coefficient

Eestech  Dr Foods

Pay attention - limited upside

The 3 months correlation between Eestech and DRFS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eestech and Dr Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Foods and Eestech 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 Eestech are associated (or correlated) with Dr Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Foods has no effect on the direction of Eestech i.e., Eestech and Dr Foods go up and down completely randomly.

Pair Corralation between Eestech and Dr Foods

If you would invest  3.62  in Dr Foods on November 20, 2024 and sell it today you would earn a total of  0.37  from holding Dr Foods or generate 10.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Eestech  vs.  Dr Foods

Eestech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eestech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Eestech is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Dr Foods

Risk-Adjusted Performance

OK

Over the last 90 days Dr Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively abnormal technical and fundamental indicators, Dr Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eestech and Dr Foods

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

The idea behind Eestech and Dr Foods 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.