Correlation Between East Africa and Blonder Tongue

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

By analyzing existing cross correlation between East Africa Metals and Blonder Tongue Laboratories, you can compare the effects of market volatilities on East Africa and Blonder Tongue 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 East Africa with a short position of Blonder Tongue. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Blonder Tongue.

Diversification Opportunities for East Africa and Blonder Tongue

0.29

Correlation Coefficient

East Africa  Blonder Tongue

Modest diversification

The 3 months correlation between East and Blonder is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Blonder Tongue Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blonder Tongue Labor and East Africa 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 East Africa Metals are associated (or correlated) with Blonder Tongue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blonder Tongue Labor has no effect on the direction of East Africa i.e., East Africa and Blonder Tongue go up and down completely randomly.

Pair Corralation between East Africa and Blonder Tongue

If you would invest  30.00  in Blonder Tongue Laboratories on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Blonder Tongue Laboratories or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

East Africa Metals  vs.  Blonder Tongue Laboratories

East Africa Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Africa Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Blonder Tongue Labor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blonder Tongue Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Blonder Tongue is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with East Africa and Blonder Tongue

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

The idea behind East Africa Metals and Blonder Tongue Laboratories 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.