Correlation Between Saferoads Holdings and EROAD

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

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

Diversification Opportunities for Saferoads Holdings and EROAD

-0.33

Correlation Coefficient

Saferoads Holdings  EROAD

Very good diversification

The 3 months correlation between Saferoads and EROAD is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Saferoads Holdings and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Saferoads Holdings 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 Saferoads Holdings are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Saferoads Holdings i.e., Saferoads Holdings and EROAD go up and down completely randomly.

Pair Corralation between Saferoads Holdings and EROAD

Assuming the 90 days trading horizon Saferoads Holdings is expected to generate 19.22 times more return on investment than EROAD. However, Saferoads Holdings is 19.22 times more volatile than EROAD. It trades about 0.12 of its potential returns per unit of risk. EROAD is currently generating about -0.07 per unit of risk. If you would invest  4.10  in Saferoads Holdings on December 30, 2024 and sell it today you would earn a total of  13.90  from holding Saferoads Holdings or generate 339.02% return on investment over 90 days.

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

Saferoads Holdings  vs.  EROAD

Saferoads Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saferoads Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical indicators, Saferoads Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

EROAD

Risk-Adjusted Performance

Very Weak

Over the last 90 days EROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Saferoads Holdings and EROAD

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

The idea behind Saferoads Holdings and EROAD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.