Correlation Between Top Frontier and EEI Corp

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

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

Diversification Opportunities for Top Frontier and EEI Corp

-0.05

Correlation Coefficient

Top Frontier  EEI Corp

Good diversification

The 3 months correlation between Top and EEI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment and EEI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EEI Corp and Top Frontier 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 Top Frontier Investment are associated (or correlated) with EEI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EEI Corp has no effect on the direction of Top Frontier i.e., Top Frontier and EEI Corp go up and down completely randomly.

Pair Corralation between Top Frontier and EEI Corp

Assuming the 90 days trading horizon Top Frontier Investment is expected to under-perform the EEI Corp. But the stock apears to be less risky and, when comparing its historical volatility, Top Frontier Investment is 1.18 times less risky than EEI Corp. The stock trades about -0.01 of its potential returns per unit of risk. The EEI Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  344.00  in EEI Corp on December 20, 2024 and sell it today you would earn a total of  76.00  from holding EEI Corp or generate 22.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.98%
Values	Daily Returns

Top Frontier Investment  vs.  EEI Corp

Top Frontier Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Top Frontier Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Top Frontier is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

EEI Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EEI Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, EEI Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Top Frontier and EEI Corp

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

The idea behind Top Frontier Investment and EEI Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.