Correlation Between E Home and Golden Heaven

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

By analyzing existing cross correlation between E Home Household Service and Golden Heaven Group, you can compare the effects of market volatilities on E Home and Golden Heaven 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 E Home with a short position of Golden Heaven. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Golden Heaven.

Diversification Opportunities for E Home and Golden Heaven

0.22

Correlation Coefficient

E Home  Golden Heaven

Modest diversification

The 3 months correlation between EJH and Golden is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding E Home Household Service and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group and E Home 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 E Home Household Service are associated (or correlated) with Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of E Home i.e., E Home and Golden Heaven go up and down completely randomly.

Pair Corralation between E Home and Golden Heaven

Considering the 90-day investment horizon E Home Household Service is expected to generate 0.82 times more return on investment than Golden Heaven. However, E Home Household Service is 1.23 times less risky than Golden Heaven. It trades about -0.35 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.32 per unit of risk. If you would invest  102.00  in E Home Household Service on December 4, 2024 and sell it today you would lose (48.83) from holding E Home Household Service or give up 47.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

E Home Household Service  vs.  Golden Heaven Group

E Home Household

Risk-Adjusted Performance

Very Weak

Over the last 90 days E Home Household Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, E Home is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Golden Heaven Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Heaven Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with E Home and Golden Heaven

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

The idea behind E Home Household Service and Golden Heaven Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.