Correlation Between Eastern Technical and Quality Houses

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

Diversification Opportunities for Eastern Technical and Quality Houses

0.82

Correlation Coefficient

Eastern Technical  Quality Houses

Very poor diversification

The 3 months correlation between Eastern and Quality is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and Quality Houses Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Houses Property 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 Quality Houses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Houses Property has no effect on the direction of Eastern Technical i.e., Eastern Technical and Quality Houses go up and down completely randomly.

Pair Corralation between Eastern Technical and Quality Houses

Assuming the 90 days trading horizon Eastern Technical Engineering is expected to generate 9.32 times more return on investment than Quality Houses. However, Eastern Technical is 9.32 times more volatile than Quality Houses Property. It trades about 0.04 of its potential returns per unit of risk. Quality Houses Property is currently generating about -0.06 per unit of risk. If you would invest  117.00  in Eastern Technical Engineering on October 7, 2024 and sell it today you would lose (32.00) from holding Eastern Technical Engineering or give up 27.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Eastern Technical Engineering  vs.  Quality Houses Property

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.

Quality Houses Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quality Houses Property has generated negative risk-adjusted returns adding no value to fund investors. Despite conflicting performance in the last few months, the Fund's forward-looking signals 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 fund institutional investors.

Pair Trading with Eastern Technical and Quality Houses

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

The idea behind Eastern Technical Engineering and Quality Houses Property 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.