Correlation Between Eton Pharmaceuticals and Wuhan General

Can any of the company-specific risk be diversified away by investing in both Eton Pharmaceuticals and Wuhan General 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 Eton Pharmaceuticals and Wuhan General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eton Pharmaceuticals and Wuhan General Gr, you can compare the effects of market volatilities on Eton Pharmaceuticals and Wuhan General 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 Eton Pharmaceuticals with a short position of Wuhan General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eton Pharmaceuticals and Wuhan General.

Diversification Opportunities for Eton Pharmaceuticals and Wuhan General

-0.78

Correlation Coefficient

Eton Pharmaceuticals  Wuhan General

Pay attention - limited upside

The 3 months correlation between Eton and Wuhan is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Eton Pharmaceuticals and Wuhan General Gr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan General Gr and Eton Pharmaceuticals 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 Eton Pharmaceuticals are associated (or correlated) with Wuhan General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan General Gr has no effect on the direction of Eton Pharmaceuticals i.e., Eton Pharmaceuticals and Wuhan General go up and down completely randomly.

Pair Corralation between Eton Pharmaceuticals and Wuhan General

If you would invest  317.00  in Eton Pharmaceuticals on October 4, 2024 and sell it today you would earn a total of  1,015  from holding Eton Pharmaceuticals or generate 320.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	2.41%
Values	Daily Returns

Eton Pharmaceuticals  vs.  Wuhan General Gr

Eton Pharmaceuticals

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eton Pharmaceuticals are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Eton Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Wuhan General Gr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wuhan General Gr has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Wuhan General is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eton Pharmaceuticals and Wuhan General

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

The idea behind Eton Pharmaceuticals and Wuhan General Gr 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.