Correlation Between Eguana Technologies and Cielo Waste

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

By analyzing existing cross correlation between Eguana Technologies and Cielo Waste Solutions, you can compare the effects of market volatilities on Eguana Technologies and Cielo Waste 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 Eguana Technologies with a short position of Cielo Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eguana Technologies and Cielo Waste.

Diversification Opportunities for Eguana Technologies and Cielo Waste

-0.27

Correlation Coefficient

Eguana Technologies  Cielo Waste

Very good diversification

The 3 months correlation between Eguana and Cielo is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eguana Technologies and Cielo Waste Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cielo Waste Solutions and Eguana Technologies 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 Eguana Technologies are associated (or correlated) with Cielo Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cielo Waste Solutions has no effect on the direction of Eguana Technologies i.e., Eguana Technologies and Cielo Waste go up and down completely randomly.

Pair Corralation between Eguana Technologies and Cielo Waste

Assuming the 90 days horizon Eguana Technologies is expected to generate 8.18 times more return on investment than Cielo Waste. However, Eguana Technologies is 8.18 times more volatile than Cielo Waste Solutions. It trades about 0.17 of its potential returns per unit of risk. Cielo Waste Solutions is currently generating about 0.04 per unit of risk. If you would invest  1.00  in Eguana Technologies on December 1, 2024 and sell it today you would earn a total of  0.50  from holding Eguana Technologies or generate 50.0% return on investment over 90 days.

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

Eguana Technologies  vs.  Cielo Waste Solutions

Eguana Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eguana Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Eguana Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Cielo Waste Solutions

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cielo Waste Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cielo Waste may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eguana Technologies and Cielo Waste

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

The idea behind Eguana Technologies and Cielo Waste Solutions 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.