Correlation Between Eureka Design and Index International

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

By analyzing existing cross correlation between Eureka Design Public and Index International Group, you can compare the effects of market volatilities on Eureka Design and Index 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 Eureka Design with a short position of Index International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eureka Design and Index International.

Diversification Opportunities for Eureka Design and Index International

0.16

Correlation Coefficient

Eureka Design  Index International

Average diversification

The 3 months correlation between Eureka and Index is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eureka Design Public and Index International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Index International and Eureka Design 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 Eureka Design Public are associated (or correlated) with Index International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Index International has no effect on the direction of Eureka Design i.e., Eureka Design and Index International go up and down completely randomly.

Pair Corralation between Eureka Design and Index International

Assuming the 90 days trading horizon Eureka Design Public is expected to under-perform the Index International. But the stock apears to be less risky and, when comparing its historical volatility, Eureka Design Public is 1.03 times less risky than Index International. The stock trades about -0.09 of its potential returns per unit of risk. The Index International Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Index International Group on December 21, 2024 and sell it today you would earn a total of  4.00  from holding Index International Group or generate 4.88% return on investment over 90 days.

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

Eureka Design Public  vs.  Index International Group

Eureka Design Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eureka Design Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers 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.

Index International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Index International Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Index International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eureka Design and Index International

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

The idea behind Eureka Design Public and Index International Group 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.