Correlation Between E For and Grande Asset

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Can any of the company-specific risk be diversified away by investing in both E For and Grande Asset 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 E For and Grande Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E for L and Grande Asset Hotels, you can compare the effects of market volatilities on E For and Grande Asset 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 E For with a short position of Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of E For and Grande Asset.

Diversification Opportunities for E For and Grande Asset

EFORLGrandeDiversified AwayEFORLGrandeDiversified Away100%
0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between EFORL and Grande is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding E for L and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and E For 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 E for L are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of E For i.e., E For and Grande Asset go up and down completely randomly.

Pair Corralation between E For and Grande Asset

Assuming the 90 days trading horizon E for L is expected to generate 0.3 times more return on investment than Grande Asset. However, E for L is 3.36 times less risky than Grande Asset. It trades about -0.07 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about -0.07 per unit of risk. If you would invest  27.00  in E for L on November 23, 2024 and sell it today you would lose (4.00) from holding E for L or give up 14.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

E for L  vs.  Grande Asset Hotels

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-20020
JavaScript chart by amCharts 3.21.15EFORL GRAND
       Timeline  
E for L 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days E for L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.220.230.240.250.260.270.280.290.30.31
Grande Asset Hotels 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Grande Asset Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.040.050.060.070.080.090.1

E For and Grande Asset Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.2-8.39-5.58-2.760.04692.795.628.4611.29 0.0050.0100.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15EFORL GRAND
       Returns  

Pair Trading with E For and Grande Asset

The main advantage of trading using opposite E For and Grande Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E For position performs unexpectedly, Grande Asset 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 Grande Asset will offset losses from the drop in Grande Asset's long position.
The idea behind E for L and Grande Asset Hotels 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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