Correlation Between Eastern Technical and SPCG Public

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

Diversification Opportunities for Eastern Technical and SPCG Public

-0.4

Correlation Coefficient

Eastern Technical  SPCG Public

Very good diversification

The 3 months correlation between Eastern and SPCG is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and SPCG Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPCG 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 SPCG Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPCG Public has no effect on the direction of Eastern Technical i.e., Eastern Technical and SPCG Public go up and down completely randomly.

Pair Corralation between Eastern Technical and SPCG Public

Assuming the 90 days trading horizon Eastern Technical Engineering is expected to under-perform the SPCG Public. In addition to that, Eastern Technical is 1.79 times more volatile than SPCG Public. It trades about -0.15 of its total potential returns per unit of risk. SPCG Public is currently generating about -0.02 per unit of volatility. If you would invest  776.00  in SPCG Public on December 30, 2024 and sell it today you would lose (16.00) from holding SPCG Public or give up 2.06% of portfolio value over 90 days.

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

Eastern Technical Engineering  vs.  SPCG Public

Eastern Technical

Risk-Adjusted Performance

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SPCG Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPCG Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, SPCG Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Eastern Technical and SPCG Public

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

The idea behind Eastern Technical Engineering and SPCG 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.