Correlation Between Eurasia Mining and Westinghouse Air

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

By analyzing existing cross correlation between Eurasia Mining Plc and Westinghouse Air Brake, you can compare the effects of market volatilities on Eurasia Mining and Westinghouse Air 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 Eurasia Mining with a short position of Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurasia Mining and Westinghouse Air.

Diversification Opportunities for Eurasia Mining and Westinghouse Air

-0.24

Correlation Coefficient

Eurasia Mining  Westinghouse Air

Very good diversification

The 3 months correlation between Eurasia and Westinghouse is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Eurasia Mining Plc and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake and Eurasia Mining 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 Eurasia Mining Plc are associated (or correlated) with Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of Eurasia Mining i.e., Eurasia Mining and Westinghouse Air go up and down completely randomly.

Pair Corralation between Eurasia Mining and Westinghouse Air

Assuming the 90 days horizon Eurasia Mining Plc is expected to generate 2.2 times more return on investment than Westinghouse Air. However, Eurasia Mining is 2.2 times more volatile than Westinghouse Air Brake. It trades about 0.12 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about -0.06 per unit of risk. If you would invest  1.80  in Eurasia Mining Plc on December 23, 2024 and sell it today you would earn a total of  0.55  from holding Eurasia Mining Plc or generate 30.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Eurasia Mining Plc  vs.  Westinghouse Air Brake

Eurasia Mining Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurasia Mining Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Eurasia Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Westinghouse Air Brake

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westinghouse Air Brake has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Eurasia Mining and Westinghouse Air

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

The idea behind Eurasia Mining Plc and Westinghouse Air Brake 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.