Correlation Between Eros Resources and Leading Edge

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

By analyzing existing cross correlation between Eros Resources Corp and Leading Edge Materials, you can compare the effects of market volatilities on Eros Resources and Leading Edge 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 Eros Resources with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eros Resources and Leading Edge.

Diversification Opportunities for Eros Resources and Leading Edge

0.0

Correlation Coefficient

Eros Resources  Leading Edge

Pay attention - limited upside

The 3 months correlation between Eros and Leading is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Eros Resources 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 Eros Resources Corp are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Eros Resources i.e., Eros Resources and Leading Edge go up and down completely randomly.

Pair Corralation between Eros Resources and Leading Edge

Assuming the 90 days horizon Eros Resources Corp is expected to generate 3.83 times more return on investment than Leading Edge. However, Eros Resources is 3.83 times more volatile than Leading Edge Materials. It trades about 0.05 of its potential returns per unit of risk. Leading Edge Materials is currently generating about -0.09 per unit of risk. If you would invest  5.00  in Eros Resources Corp on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Eros Resources Corp or generate 0.0% return on investment over 90 days.

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

Eros Resources Corp  vs.  Leading Edge Materials

Eros Resources Corp

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eros Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Eros Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Leading Edge Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leading Edge Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Eros Resources and Leading Edge

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

The idea behind Eros Resources Corp and Leading Edge Materials 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 CEOs Directory module to screen CEOs from public companies around the world.