Correlation Between Eastern Technical and ALL ENERGY

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

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

Diversification Opportunities for Eastern Technical and ALL ENERGY

0.83

Correlation Coefficient

Eastern Technical  ALL ENERGY

Very poor diversification

The 3 months correlation between Eastern and ALL is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and ALL ENERGY UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALL ENERGY UTILITIES and Eastern Technical 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 Technical Engineering are associated (or correlated) with ALL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALL ENERGY UTILITIES has no effect on the direction of Eastern Technical i.e., Eastern Technical and ALL ENERGY go up and down completely randomly.

Pair Corralation between Eastern Technical and ALL ENERGY

Assuming the 90 days trading horizon Eastern Technical Engineering is expected to generate 1.01 times more return on investment than ALL ENERGY. However, Eastern Technical is 1.01 times more volatile than ALL ENERGY UTILITIES. It trades about -0.16 of its potential returns per unit of risk. ALL ENERGY UTILITIES is currently generating about -0.37 per unit of risk. If you would invest  90.00  in Eastern Technical Engineering on October 10, 2024 and sell it today you would lose (7.00) from holding Eastern Technical Engineering or give up 7.78% of portfolio value over 90 days.

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

Eastern Technical Engineering  vs.  ALL ENERGY UTILITIES

Eastern Technical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Technical Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ALL ENERGY UTILITIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALL ENERGY UTILITIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Eastern Technical and ALL ENERGY

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

The idea behind Eastern Technical Engineering and ALL ENERGY UTILITIES 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.