Correlation Between EPlus and EGain

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

By analyzing existing cross correlation between ePlus inc and eGain, you can compare the effects of market volatilities on EPlus and EGain 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 EPlus with a short position of EGain. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPlus and EGain.

Diversification Opportunities for EPlus and EGain

0.85

Correlation Coefficient

EPlus  EGain

Very poor diversification

The 3 months correlation between EPlus and EGain is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ePlus inc and eGain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGain and EPlus 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 ePlus inc are associated (or correlated) with EGain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGain has no effect on the direction of EPlus i.e., EPlus and EGain go up and down completely randomly.

Pair Corralation between EPlus and EGain

Given the investment horizon of 90 days ePlus inc is expected to generate 0.68 times more return on investment than EGain. However, ePlus inc is 1.48 times less risky than EGain. It trades about -0.08 of its potential returns per unit of risk. eGain is currently generating about -0.06 per unit of risk. If you would invest  7,317  in ePlus inc on December 28, 2024 and sell it today you would lose (892.00) from holding ePlus inc or give up 12.19% of portfolio value over 90 days.

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

ePlus inc  vs.  eGain

ePlus inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ePlus inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

eGain

Risk-Adjusted Performance

Very Weak

Over the last 90 days eGain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with EPlus and EGain

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

The idea behind ePlus inc and eGain 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.