Correlation Between Eshallgo and Network CN

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

Diversification Opportunities for Eshallgo and Network CN

-0.3

Correlation Coefficient

Eshallgo  Network CN

Very good diversification

The 3 months correlation between Eshallgo and Network is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eshallgo Class A and Network CN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network CN 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 Network CN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network CN has no effect on the direction of Eshallgo i.e., Eshallgo and Network CN go up and down completely randomly.

Pair Corralation between Eshallgo and Network CN

Given the investment horizon of 90 days Eshallgo Class A is expected to under-perform the Network CN. But the stock apears to be less risky and, when comparing its historical volatility, Eshallgo Class A is 2.15 times less risky than Network CN. The stock trades about -0.25 of its potential returns per unit of risk. The Network CN is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Network CN on October 24, 2024 and sell it today you would earn a total of  4.00  from holding Network CN or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Eshallgo Class A  vs.  Network CN

Eshallgo Class A

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Network CN

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Network CN are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Network CN displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eshallgo and Network CN

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

The idea behind Eshallgo Class A and Network CN 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.