Correlation Between Seagate Technology and Ebang International

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

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

Diversification Opportunities for Seagate Technology and Ebang International

0.02

Correlation Coefficient

Seagate Technology  Ebang International

Significant diversification

The 3 months correlation between Seagate and Ebang is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology PLC and Ebang International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebang International and Seagate 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 Seagate Technology PLC are associated (or correlated) with Ebang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebang International has no effect on the direction of Seagate Technology i.e., Seagate Technology and Ebang International go up and down completely randomly.

Pair Corralation between Seagate Technology and Ebang International

Considering the 90-day investment horizon Seagate Technology is expected to generate 1.28 times less return on investment than Ebang International. But when comparing it to its historical volatility, Seagate Technology PLC is 3.01 times less risky than Ebang International. It trades about 0.06 of its potential returns per unit of risk. Ebang International Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  731.00  in Ebang International Holdings on October 21, 2024 and sell it today you would lose (98.00) from holding Ebang International Holdings or give up 13.41% of portfolio value over 90 days.

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

Seagate Technology PLC  vs.  Ebang International Holdings

Seagate Technology PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagate Technology PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ebang International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ebang International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ebang International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Seagate Technology and Ebang International

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

The idea behind Seagate Technology PLC and Ebang International Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.