Correlation Between Sabien Technology and Eagle Eye

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

By analyzing existing cross correlation between Sabien Technology Group and Eagle Eye Solutions, you can compare the effects of market volatilities on Sabien Technology and Eagle Eye 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 Sabien Technology with a short position of Eagle Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabien Technology and Eagle Eye.

Diversification Opportunities for Sabien Technology and Eagle Eye

0.75

Correlation Coefficient

Sabien Technology  Eagle Eye

Poor diversification

The 3 months correlation between Sabien and Eagle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Sabien Technology Group and Eagle Eye Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Eye Solutions and Sabien Technology 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 Sabien Technology Group are associated (or correlated) with Eagle Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Eye Solutions has no effect on the direction of Sabien Technology i.e., Sabien Technology and Eagle Eye go up and down completely randomly.

Pair Corralation between Sabien Technology and Eagle Eye

Assuming the 90 days trading horizon Sabien Technology Group is expected to under-perform the Eagle Eye. But the stock apears to be less risky and, when comparing its historical volatility, Sabien Technology Group is 1.76 times less risky than Eagle Eye. The stock trades about -0.39 of its potential returns per unit of risk. The Eagle Eye Solutions is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  48,500  in Eagle Eye Solutions on December 22, 2024 and sell it today you would lose (10,900) from holding Eagle Eye Solutions or give up 22.47% of portfolio value over 90 days.

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

Sabien Technology Group  vs.  Eagle Eye Solutions

Sabien Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabien Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eagle Eye Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Eye Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sabien Technology and Eagle Eye

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

The idea behind Sabien Technology Group and Eagle Eye Solutions 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.