Correlation Between Earth Science and CuraScientific

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

By analyzing existing cross correlation between Earth Science Tech and CuraScientific, you can compare the effects of market volatilities on Earth Science and CuraScientific 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 Earth Science with a short position of CuraScientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earth Science and CuraScientific.

Diversification Opportunities for Earth Science and CuraScientific

0.3

Correlation Coefficient

Earth Science  CuraScientific

Weak diversification

The 3 months correlation between Earth and CuraScientific is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Earth Science Tech and CuraScientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CuraScientific and Earth Science 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 Earth Science Tech are associated (or correlated) with CuraScientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CuraScientific has no effect on the direction of Earth Science i.e., Earth Science and CuraScientific go up and down completely randomly.

Pair Corralation between Earth Science and CuraScientific

Given the investment horizon of 90 days Earth Science is expected to generate 7.16 times less return on investment than CuraScientific. But when comparing it to its historical volatility, Earth Science Tech is 5.83 times less risky than CuraScientific. It trades about 0.09 of its potential returns per unit of risk. CuraScientific is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.00  in CuraScientific on September 13, 2024 and sell it today you would lose (3.81) from holding CuraScientific or give up 76.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	25.25%
Values	Daily Returns

Earth Science Tech  vs.  CuraScientific

Earth Science Tech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Earth Science Tech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Earth Science may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CuraScientific

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Earth Science and CuraScientific

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

The idea behind Earth Science Tech and CuraScientific 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.