Correlation Between Eastern and MetaVia

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

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

Diversification Opportunities for Eastern and MetaVia

0.74

Correlation Coefficient

Eastern  MetaVia

Poor diversification

The 3 months correlation between Eastern and MetaVia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and MetaVia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaVia 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 MetaVia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaVia has no effect on the direction of Eastern i.e., Eastern and MetaVia go up and down completely randomly.

Pair Corralation between Eastern and MetaVia

Considering the 90-day investment horizon Eastern Co is expected to under-perform the MetaVia. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 2.73 times less risky than MetaVia. The stock trades about -0.17 of its potential returns per unit of risk. The MetaVia is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  230.00  in MetaVia on October 6, 2024 and sell it today you would lose (16.00) from holding MetaVia or give up 6.96% of portfolio value over 90 days.

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

Eastern Co  vs.  MetaVia

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

MetaVia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetaVia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Eastern and MetaVia

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

The idea behind Eastern Co and MetaVia 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 Stocks Directory module to find actively traded stocks across global markets.