Correlation Between Eastern and Mink Therapeutics

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

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

Diversification Opportunities for Eastern and Mink Therapeutics

-0.14

Correlation Coefficient

Eastern  Mink Therapeutics

Good diversification

The 3 months correlation between Eastern and Mink is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Mink Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mink Therapeutics and Eastern 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 Eastern Co are associated (or correlated) with Mink Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mink Therapeutics has no effect on the direction of Eastern i.e., Eastern and Mink Therapeutics go up and down completely randomly.

Pair Corralation between Eastern and Mink Therapeutics

Considering the 90-day investment horizon Eastern Co is expected to under-perform the Mink Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 5.73 times less risky than Mink Therapeutics. The stock trades about -0.03 of its potential returns per unit of risk. The Mink Therapeutics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  529.00  in Mink Therapeutics on December 24, 2024 and sell it today you would earn a total of  328.00  from holding Mink Therapeutics or generate 62.0% return on investment over 90 days.

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

Eastern Co  vs.  Mink Therapeutics

Eastern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Mink Therapeutics

Risk-Adjusted Performance

OK

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

Pair Trading with Eastern and Mink Therapeutics

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

The idea behind Eastern Co and Mink Therapeutics 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.