Correlation Between General Environmental and Eastern Commercial

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

By analyzing existing cross correlation between General Environmental Conservation and Eastern Commercial Leasing, you can compare the effects of market volatilities on General Environmental and Eastern Commercial 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 General Environmental with a short position of Eastern Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Environmental and Eastern Commercial.

Diversification Opportunities for General Environmental and Eastern Commercial

0.93

Correlation Coefficient

General Environmental  Eastern Commercial

Almost no diversification

The 3 months correlation between General and Eastern is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding General Environmental Conserva and Eastern Commercial Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Commercial and General Environmental 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 General Environmental Conservation are associated (or correlated) with Eastern Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Commercial has no effect on the direction of General Environmental i.e., General Environmental and Eastern Commercial go up and down completely randomly.

Pair Corralation between General Environmental and Eastern Commercial

Assuming the 90 days trading horizon General Environmental is expected to generate 1.02 times less return on investment than Eastern Commercial. In addition to that, General Environmental is 1.0 times more volatile than Eastern Commercial Leasing. It trades about 0.13 of its total potential returns per unit of risk. Eastern Commercial Leasing is currently generating about 0.13 per unit of volatility. If you would invest  0.00  in Eastern Commercial Leasing on September 3, 2024 and sell it today you would earn a total of  113.00  from holding Eastern Commercial Leasing or generate 9.223372036854776E16% return on investment over 90 days.

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

General Environmental Conserva  vs.  Eastern Commercial Leasing

General Environmental

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Environmental Conservation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, General Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Eastern Commercial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Commercial Leasing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Eastern Commercial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with General Environmental and Eastern Commercial

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

The idea behind General Environmental Conservation and Eastern Commercial Leasing 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.