Correlation Between East Africa and 83001AAC6

Can any of the company-specific risk be diversified away by investing in both East Africa and 83001AAC6 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 83001AAC6 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 Six Flags Entertainment, you can compare the effects of market volatilities on East Africa and 83001AAC6 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 83001AAC6. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and 83001AAC6.

Diversification Opportunities for East Africa and 83001AAC6

0.13

Correlation Coefficient

East Africa  83001AAC6

Average diversification

The 3 months correlation between East and 83001AAC6 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Six Flags Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Flags Entertainment 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 83001AAC6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Flags Entertainment has no effect on the direction of East Africa i.e., East Africa and 83001AAC6 go up and down completely randomly.

Pair Corralation between East Africa and 83001AAC6

Assuming the 90 days horizon East Africa Metals is expected to generate 151.67 times more return on investment than 83001AAC6. However, East Africa is 151.67 times more volatile than Six Flags Entertainment. It trades about 0.09 of its potential returns per unit of risk. Six Flags Entertainment is currently generating about 0.04 per unit of risk. If you would invest  6.00  in East Africa Metals on September 19, 2024 and sell it today you would earn a total of  5.00  from holding East Africa Metals or generate 83.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.68%
Values	Daily Returns

East Africa Metals  vs.  Six Flags Entertainment

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.

Six Flags Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Flags Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 83001AAC6 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with East Africa and 83001AAC6

The main advantage of trading using opposite East Africa and 83001AAC6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, 83001AAC6 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 83001AAC6 will offset losses from the drop in 83001AAC6's long position.

The idea behind East Africa Metals and Six Flags Entertainment 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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.