Correlation Between East Africa and MARATHON

Can any of the company-specific risk be diversified away by investing in both East Africa and MARATHON 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 MARATHON 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 MARATHON PETE P, you can compare the effects of market volatilities on East Africa and MARATHON 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 MARATHON. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and MARATHON.

Diversification Opportunities for East Africa and MARATHON

0.0

Correlation Coefficient

East Africa  MARATHON

Pay attention - limited upside

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

Pair Corralation between East Africa and MARATHON

If you would invest  9,937  in MARATHON PETE P on October 26, 2024 and sell it today you would lose (45.00) from holding MARATHON PETE P or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	79.37%
Values	Daily Returns

East Africa Metals  vs.  MARATHON PETE P

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 nearly stable primary indicators, East Africa is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MARATHON PETE P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARATHON PETE P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MARATHON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with East Africa and MARATHON

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

The idea behind East Africa Metals and MARATHON PETE P 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..