Correlation Between Eneraqua Technologies and Eastinco Mining

Can any of the company-specific risk be diversified away by investing in both Eneraqua Technologies and Eastinco Mining 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 Eneraqua Technologies and Eastinco Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eneraqua Technologies PLC and Eastinco Mining Exploration, you can compare the effects of market volatilities on Eneraqua Technologies and Eastinco Mining 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 Eneraqua Technologies with a short position of Eastinco Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eneraqua Technologies and Eastinco Mining.

Diversification Opportunities for Eneraqua Technologies and Eastinco Mining

0.32

Correlation Coefficient

Eneraqua Technologies  Eastinco Mining

Weak diversification

The 3 months correlation between Eneraqua and Eastinco is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eneraqua Technologies PLC and Eastinco Mining Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastinco Mining Expl and Eneraqua Technologies 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 Eneraqua Technologies PLC are associated (or correlated) with Eastinco Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastinco Mining Expl has no effect on the direction of Eneraqua Technologies i.e., Eneraqua Technologies and Eastinco Mining go up and down completely randomly.

Pair Corralation between Eneraqua Technologies and Eastinco Mining

Assuming the 90 days trading horizon Eneraqua Technologies PLC is expected to under-perform the Eastinco Mining. But the stock apears to be less risky and, when comparing its historical volatility, Eneraqua Technologies PLC is 1.29 times less risky than Eastinco Mining. The stock trades about -0.11 of its potential returns per unit of risk. The Eastinco Mining Exploration is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,550  in Eastinco Mining Exploration on December 24, 2024 and sell it today you would lose (250.00) from holding Eastinco Mining Exploration or give up 5.49% of portfolio value over 90 days.

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

Eneraqua Technologies PLC  vs.  Eastinco Mining Exploration

Eneraqua Technologies PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eneraqua Technologies PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eastinco Mining Expl

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastinco Mining Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Eastinco Mining is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eneraqua Technologies and Eastinco Mining

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

The idea behind Eneraqua Technologies PLC and Eastinco Mining Exploration 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.