Correlation Between RenoWorks Software and EGain

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

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

Diversification Opportunities for RenoWorks Software and EGain

0.19

Correlation Coefficient

RenoWorks Software  EGain

Average diversification

The 3 months correlation between RenoWorks and EGain is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding RenoWorks Software and eGain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGain and RenoWorks Software 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 RenoWorks Software 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 RenoWorks Software i.e., RenoWorks Software and EGain go up and down completely randomly.

Pair Corralation between RenoWorks Software and EGain

Assuming the 90 days horizon RenoWorks Software is expected to generate 0.39 times more return on investment than EGain. However, RenoWorks Software is 2.6 times less risky than EGain. It trades about 0.06 of its potential returns per unit of risk. eGain is currently generating about -0.04 per unit of risk. If you would invest  18.00  in RenoWorks Software on December 22, 2024 and sell it today you would earn a total of  1.00  from holding RenoWorks Software or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

RenoWorks Software  vs.  eGain

RenoWorks Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RenoWorks Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, RenoWorks Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with RenoWorks Software and EGain

The main advantage of trading using opposite RenoWorks Software and EGain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RenoWorks Software 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 RenoWorks Software 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.