Correlation Between Space-Communication and ECD Automotive

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

By analyzing existing cross correlation between Space Communication and ECD Automotive Design, you can compare the effects of market volatilities on Space-Communication and ECD Automotive 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 Space-Communication with a short position of ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Space-Communication and ECD Automotive.

Diversification Opportunities for Space-Communication and ECD Automotive

0.0

Correlation Coefficient

Space-Communication  ECD Automotive

Pay attention - limited upside

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

Pair Corralation between Space-Communication and ECD Automotive

If you would invest  20.00  in Space Communication on December 24, 2024 and sell it today you would earn a total of  0.00  from holding Space Communication or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Space Communication  vs.  ECD Automotive Design

Space Communication

Risk-Adjusted Performance

Very Weak

Over the last 90 days Space Communication has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Space-Communication is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

ECD Automotive Design

Risk-Adjusted Performance

Very Weak

Over the last 90 days ECD Automotive Design has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Space-Communication and ECD Automotive

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

The idea behind Space Communication and ECD Automotive Design 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.