Correlation Between Eco Wave and Astra Energy

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

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

Diversification Opportunities for Eco Wave and Astra Energy

-0.65

Correlation Coefficient

Eco Wave  Astra Energy

Excellent diversification

The 3 months correlation between Eco and Astra is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eco Wave Power and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy and Eco Wave 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 Eco Wave Power are associated (or correlated) with Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Eco Wave i.e., Eco Wave and Astra Energy go up and down completely randomly.

Pair Corralation between Eco Wave and Astra Energy

Given the investment horizon of 90 days Eco Wave Power is expected to generate 1.04 times more return on investment than Astra Energy. However, Eco Wave is 1.04 times more volatile than Astra Energy. It trades about 0.16 of its potential returns per unit of risk. Astra Energy is currently generating about 0.01 per unit of risk. If you would invest  247.00  in Eco Wave Power on September 27, 2024 and sell it today you would earn a total of  1,107  from holding Eco Wave Power or generate 448.18% return on investment over 90 days.

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

Eco Wave Power  vs.  Astra Energy

Eco Wave Power

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Wave Power are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Eco Wave exhibited solid returns over the last few months and may actually be approaching a breakup point.

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astra Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Eco Wave and Astra Energy

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

The idea behind Eco Wave Power and Astra Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.