Correlation Between ECOBANK TRANSNATIONAL and ABC TRANSPORT

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Can any of the company-specific risk be diversified away by investing in both ECOBANK TRANSNATIONAL and ABC TRANSPORT 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 ECOBANK TRANSNATIONAL and ABC TRANSPORT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECOBANK TRANSNATIONAL INCORPORATED and ABC TRANSPORT PLC, you can compare the effects of market volatilities on ECOBANK TRANSNATIONAL and ABC TRANSPORT 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 ECOBANK TRANSNATIONAL with a short position of ABC TRANSPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECOBANK TRANSNATIONAL and ABC TRANSPORT.

Diversification Opportunities for ECOBANK TRANSNATIONAL and ABC TRANSPORT

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ECOBANK and ABC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ECOBANK TRANSNATIONAL INCORPOR and ABC TRANSPORT PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC TRANSPORT PLC and ECOBANK TRANSNATIONAL 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 ECOBANK TRANSNATIONAL INCORPORATED are associated (or correlated) with ABC TRANSPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC TRANSPORT PLC has no effect on the direction of ECOBANK TRANSNATIONAL i.e., ECOBANK TRANSNATIONAL and ABC TRANSPORT go up and down completely randomly.

Pair Corralation between ECOBANK TRANSNATIONAL and ABC TRANSPORT

Assuming the 90 days trading horizon ECOBANK TRANSNATIONAL INCORPORATED is expected to generate 0.62 times more return on investment than ABC TRANSPORT. However, ECOBANK TRANSNATIONAL INCORPORATED is 1.61 times less risky than ABC TRANSPORT. It trades about 0.23 of its potential returns per unit of risk. ABC TRANSPORT PLC is currently generating about -0.17 per unit of risk. If you would invest  2,800  in ECOBANK TRANSNATIONAL INCORPORATED on October 26, 2024 and sell it today you would earn a total of  240.00  from holding ECOBANK TRANSNATIONAL INCORPORATED or generate 8.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ECOBANK TRANSNATIONAL INCORPOR  vs.  ABC TRANSPORT PLC

 Performance 
       Timeline  
ECOBANK TRANSNATIONAL 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in ECOBANK TRANSNATIONAL INCORPORATED are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ECOBANK TRANSNATIONAL unveiled solid returns over the last few months and may actually be approaching a breakup point.
ABC TRANSPORT PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ABC TRANSPORT PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

ECOBANK TRANSNATIONAL and ABC TRANSPORT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ECOBANK TRANSNATIONAL and ABC TRANSPORT

The main advantage of trading using opposite ECOBANK TRANSNATIONAL and ABC TRANSPORT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECOBANK TRANSNATIONAL position performs unexpectedly, ABC TRANSPORT 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 ABC TRANSPORT will offset losses from the drop in ABC TRANSPORT's long position.
The idea behind ECOBANK TRANSNATIONAL INCORPORATED and ABC TRANSPORT PLC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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