Correlation Between Video River and Eco Depot

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

By analyzing existing cross correlation between Video River Networks and Eco Depot, you can compare the effects of market volatilities on Video River and Eco Depot 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 Video River with a short position of Eco Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Video River and Eco Depot.

Diversification Opportunities for Video River and Eco Depot

0.59

Correlation Coefficient

Video River  Eco Depot

Very weak diversification

The 3 months correlation between Video and Eco is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Video River Networks and Eco Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Depot and Video River 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 Video River Networks are associated (or correlated) with Eco Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Depot has no effect on the direction of Video River i.e., Video River and Eco Depot go up and down completely randomly.

Pair Corralation between Video River and Eco Depot

Given the investment horizon of 90 days Video River Networks is expected to generate 1.46 times more return on investment than Eco Depot. However, Video River is 1.46 times more volatile than Eco Depot. It trades about 0.07 of its potential returns per unit of risk. Eco Depot is currently generating about 0.01 per unit of risk. If you would invest  1.04  in Video River Networks on September 14, 2024 and sell it today you would lose (0.80) from holding Video River Networks or give up 76.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

Video River Networks  vs.  Eco Depot

Video River Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Video River Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite unsteady technical indicators, Video River may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eco Depot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eco Depot has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Video River and Eco Depot

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

The idea behind Video River Networks and Eco Depot 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.