Correlation Between Eshallgo and Acme United

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

By analyzing existing cross correlation between Eshallgo Class A and Acme United, you can compare the effects of market volatilities on Eshallgo and Acme United 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 Eshallgo with a short position of Acme United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eshallgo and Acme United.

Diversification Opportunities for Eshallgo and Acme United

0.62

Correlation Coefficient

Eshallgo  Acme United

Poor diversification

The 3 months correlation between Eshallgo and Acme is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Eshallgo Class A and Acme United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acme United and Eshallgo 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 Eshallgo Class A are associated (or correlated) with Acme United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acme United has no effect on the direction of Eshallgo i.e., Eshallgo and Acme United go up and down completely randomly.

Pair Corralation between Eshallgo and Acme United

Given the investment horizon of 90 days Eshallgo Class A is expected to under-perform the Acme United. In addition to that, Eshallgo is 5.03 times more volatile than Acme United. It trades about -0.13 of its total potential returns per unit of risk. Acme United is currently generating about -0.08 per unit of volatility. If you would invest  4,338  in Acme United on December 3, 2024 and sell it today you would lose (429.00) from holding Acme United or give up 9.89% of portfolio value over 90 days.

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

Eshallgo Class A  vs.  Acme United

Eshallgo Class A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eshallgo Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Acme United

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acme United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Eshallgo and Acme United

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

The idea behind Eshallgo Class A and Acme United 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.