Correlation Between LS Starrett and Eastern

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

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

Diversification Opportunities for LS Starrett and Eastern

0.0

Correlation Coefficient

LS Starrett  Eastern

Pay attention - limited upside

The 3 months correlation between SCX and Eastern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LS Starrett and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and LS Starrett 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 LS Starrett are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of LS Starrett i.e., LS Starrett and Eastern go up and down completely randomly.

Pair Corralation between LS Starrett and Eastern

If you would invest  2,647  in Eastern Co on December 27, 2024 and sell it today you would earn a total of  26.00  from holding Eastern Co or generate 0.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LS Starrett  vs.  Eastern Co

LS Starrett

Risk-Adjusted Performance

Very Weak

Over the last 90 days LS Starrett has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, LS Starrett is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Eastern

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Eastern is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with LS Starrett and Eastern

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

The idea behind LS Starrett and Eastern Co 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.