Correlation Between Ecofin Global and AcadeMedia

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

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

Diversification Opportunities for Ecofin Global and AcadeMedia

0.57

Correlation Coefficient

Ecofin Global  AcadeMedia

Very weak diversification

The 3 months correlation between Ecofin and AcadeMedia is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and AcadeMedia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AcadeMedia AB and Ecofin Global 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 Ecofin Global Utilities are associated (or correlated) with AcadeMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AcadeMedia AB has no effect on the direction of Ecofin Global i.e., Ecofin Global and AcadeMedia go up and down completely randomly.

Pair Corralation between Ecofin Global and AcadeMedia

Assuming the 90 days trading horizon Ecofin Global is expected to generate 2.22 times less return on investment than AcadeMedia. But when comparing it to its historical volatility, Ecofin Global Utilities is 1.13 times less risky than AcadeMedia. It trades about 0.11 of its potential returns per unit of risk. AcadeMedia AB is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  6,615  in AcadeMedia AB on December 24, 2024 and sell it today you would earn a total of  1,340  from holding AcadeMedia AB or generate 20.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ecofin Global Utilities  vs.  AcadeMedia AB

Ecofin Global Utilities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ecofin Global Utilities are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Ecofin Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AcadeMedia AB

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AcadeMedia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecofin Global and AcadeMedia

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

The idea behind Ecofin Global Utilities and AcadeMedia AB 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.