Correlation Between Ecora Resources and AJ LUCAS

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

By analyzing existing cross correlation between Ecora Resources PLC and AJ LUCAS GROUP, you can compare the effects of market volatilities on Ecora Resources and AJ LUCAS 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 Ecora Resources with a short position of AJ LUCAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecora Resources and AJ LUCAS.

Diversification Opportunities for Ecora Resources and AJ LUCAS

0.04

Correlation Coefficient

Ecora Resources  AJ LUCAS

Significant diversification

The 3 months correlation between Ecora and FW9 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ecora Resources PLC and AJ LUCAS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ LUCAS GROUP and Ecora Resources 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 Ecora Resources PLC are associated (or correlated) with AJ LUCAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ LUCAS GROUP has no effect on the direction of Ecora Resources i.e., Ecora Resources and AJ LUCAS go up and down completely randomly.

Pair Corralation between Ecora Resources and AJ LUCAS

Assuming the 90 days horizon Ecora Resources PLC is expected to under-perform the AJ LUCAS. But the stock apears to be less risky and, when comparing its historical volatility, Ecora Resources PLC is 16.91 times less risky than AJ LUCAS. The stock trades about -0.05 of its potential returns per unit of risk. The AJ LUCAS GROUP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.05  in AJ LUCAS GROUP on September 23, 2024 and sell it today you would earn a total of  0.00  from holding AJ LUCAS GROUP or generate 0.0% return on investment over 90 days.

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

Ecora Resources PLC  vs.  AJ LUCAS GROUP

Ecora Resources PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecora Resources PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

AJ LUCAS GROUP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AJ LUCAS GROUP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AJ LUCAS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecora Resources and AJ LUCAS

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

The idea behind Ecora Resources PLC and AJ LUCAS GROUP 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.