Correlation Between EJF Investments and Technicolor

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

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

Diversification Opportunities for EJF Investments and Technicolor

-0.54

Correlation Coefficient

EJF Investments  Technicolor

Excellent diversification

The 3 months correlation between EJF and Technicolor is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments and Technicolor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technicolor and EJF Investments 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 EJF Investments are associated (or correlated) with Technicolor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technicolor has no effect on the direction of EJF Investments i.e., EJF Investments and Technicolor go up and down completely randomly.

Pair Corralation between EJF Investments and Technicolor

Assuming the 90 days trading horizon EJF Investments is expected to generate 0.31 times more return on investment than Technicolor. However, EJF Investments is 3.25 times less risky than Technicolor. It trades about 0.0 of its potential returns per unit of risk. Technicolor is currently generating about -0.01 per unit of risk. If you would invest  12,716  in EJF Investments on October 27, 2024 and sell it today you would lose (716.00) from holding EJF Investments or give up 5.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

EJF Investments  vs.  Technicolor

EJF Investments

Risk-Adjusted Performance

6 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EJF Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Technicolor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Technicolor 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 basic 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 EJF Investments and Technicolor

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

The idea behind EJF Investments and Technicolor 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.