Correlation Between China International and Ecotel Communication

Can any of the company-specific risk be diversified away by investing in both China International and Ecotel Communication 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 China International and Ecotel Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China International Marine and ecotel communication ag, you can compare the effects of market volatilities on China International and Ecotel Communication 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 China International with a short position of Ecotel Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of China International and Ecotel Communication.

Diversification Opportunities for China International and Ecotel Communication

-0.29

Correlation Coefficient

China International  Ecotel Communication

Very good diversification

The 3 months correlation between China and Ecotel is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding China International Marine and ecotel communication ag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ecotel communication and China International 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 China International Marine are associated (or correlated) with Ecotel Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ecotel communication has no effect on the direction of China International i.e., China International and Ecotel Communication go up and down completely randomly.

Pair Corralation between China International and Ecotel Communication

Assuming the 90 days horizon China International Marine is expected to under-perform the Ecotel Communication. In addition to that, China International is 3.71 times more volatile than ecotel communication ag. It trades about -0.16 of its total potential returns per unit of risk. ecotel communication ag is currently generating about -0.25 per unit of volatility. If you would invest  1,410  in ecotel communication ag on October 8, 2024 and sell it today you would lose (50.00) from holding ecotel communication ag or give up 3.55% of portfolio value over 90 days.

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

China International Marine  vs.  ecotel communication ag

China International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China International Marine 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.

ecotel communication

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Ecotel Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with China International and Ecotel Communication

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

The idea behind China International Marine and ecotel communication ag 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.