Correlation Between Eastern Technical and Chewathai Public

Can any of the company-specific risk be diversified away by investing in both Eastern Technical and Chewathai Public 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 Chewathai Public 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 Chewathai Public, you can compare the effects of market volatilities on Eastern Technical and Chewathai Public 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 Chewathai Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Technical and Chewathai Public.

Diversification Opportunities for Eastern Technical and Chewathai Public

0.92

Correlation Coefficient

Eastern Technical  Chewathai Public

Almost no diversification

The 3 months correlation between Eastern and Chewathai is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and Chewathai Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewathai Public 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 Chewathai Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewathai Public has no effect on the direction of Eastern Technical i.e., Eastern Technical and Chewathai Public go up and down completely randomly.

Pair Corralation between Eastern Technical and Chewathai Public

Assuming the 90 days trading horizon Eastern Technical is expected to generate 1.01 times less return on investment than Chewathai Public. But when comparing it to its historical volatility, Eastern Technical Engineering is 1.0 times less risky than Chewathai Public. It trades about 0.12 of its potential returns per unit of risk. Chewathai Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Chewathai Public on September 3, 2024 and sell it today you would earn a total of  40.00  from holding Chewathai Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Eastern Technical Engineering  vs.  Chewathai Public

Eastern Technical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Technical Engineering are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Eastern Technical disclosed solid returns over the last few months and may actually be approaching a breakup point.

Chewathai Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chewathai Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Chewathai Public sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern Technical and Chewathai Public

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

The idea behind Eastern Technical Engineering and Chewathai Public 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.