Correlation Between Sack Lunch and Eco Depot

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

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

Diversification Opportunities for Sack Lunch and Eco Depot

-0.13

Correlation Coefficient

Sack Lunch  Eco Depot

Good diversification

The 3 months correlation between Sack and Eco is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sack Lunch Productions and Eco Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Depot and Sack Lunch 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 Sack Lunch Productions 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 Sack Lunch i.e., Sack Lunch and Eco Depot go up and down completely randomly.

Pair Corralation between Sack Lunch and Eco Depot

Given the investment horizon of 90 days Sack Lunch Productions is expected to generate 0.54 times more return on investment than Eco Depot. However, Sack Lunch Productions is 1.85 times less risky than Eco Depot. It trades about -0.01 of its potential returns per unit of risk. Eco Depot is currently generating about -0.01 per unit of risk. If you would invest  0.80  in Sack Lunch Productions on September 14, 2024 and sell it today you would lose (0.19) from holding Sack Lunch Productions or give up 23.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sack Lunch Productions  vs.  Eco Depot

Sack Lunch Productions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sack Lunch Productions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sack Lunch is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

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 Sack Lunch and Eco Depot

The main advantage of trading using opposite Sack Lunch and Eco Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sack Lunch 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 Sack Lunch Productions 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.