Correlation Between Eastman Kodak and Eq Energy

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

By analyzing existing cross correlation between Eastman Kodak Co and Eq Energy Drink, you can compare the effects of market volatilities on Eastman Kodak and Eq Energy 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 Eastman Kodak with a short position of Eq Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Kodak and Eq Energy.

Diversification Opportunities for Eastman Kodak and Eq Energy

-0.56

Correlation Coefficient

Eastman Kodak  Eq Energy

Excellent diversification

The 3 months correlation between Eastman and EQLB is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Kodak Co and Eq Energy Drink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eq Energy Drink and Eastman Kodak 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 Eastman Kodak Co are associated (or correlated) with Eq Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eq Energy Drink has no effect on the direction of Eastman Kodak i.e., Eastman Kodak and Eq Energy go up and down completely randomly.

Pair Corralation between Eastman Kodak and Eq Energy

Given the investment horizon of 90 days Eastman Kodak Co is expected to under-perform the Eq Energy. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Kodak Co is 6.9 times less risky than Eq Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Eq Energy Drink is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Eq Energy Drink on December 28, 2024 and sell it today you would earn a total of  0.04  from holding Eq Energy Drink or generate 44.44% return on investment over 90 days.

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

Eastman Kodak Co  vs.  Eq Energy Drink

Eastman Kodak

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastman Kodak Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Eastman Kodak is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Eq Energy Drink

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eq Energy Drink are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Eq Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastman Kodak and Eq Energy

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

The idea behind Eastman Kodak Co and Eq Energy Drink 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.