Correlation Between Emeco Holdings and Ecofibre

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

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

Diversification Opportunities for Emeco Holdings and Ecofibre

-0.85

Correlation Coefficient

Emeco Holdings  Ecofibre

Pay attention - limited upside

The 3 months correlation between Emeco and Ecofibre is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Emeco Holdings and Ecofibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecofibre and Emeco Holdings 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 Emeco Holdings are associated (or correlated) with Ecofibre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecofibre has no effect on the direction of Emeco Holdings i.e., Emeco Holdings and Ecofibre go up and down completely randomly.

Pair Corralation between Emeco Holdings and Ecofibre

Assuming the 90 days trading horizon Emeco Holdings is expected to generate 0.25 times more return on investment than Ecofibre. However, Emeco Holdings is 3.98 times less risky than Ecofibre. It trades about 0.05 of its potential returns per unit of risk. Ecofibre is currently generating about -0.02 per unit of risk. If you would invest  66.00  in Emeco Holdings on October 23, 2024 and sell it today you would earn a total of  21.00  from holding Emeco Holdings or generate 31.82% return on investment over 90 days.

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

Emeco Holdings  vs.  Ecofibre

Emeco Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emeco Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Emeco Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ecofibre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecofibre 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Emeco Holdings and Ecofibre

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

The idea behind Emeco Holdings and Ecofibre 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.