Correlation Between Environmental Control and WB Burgers

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

By analyzing existing cross correlation between Environmental Control Corp and WB Burgers Asia, you can compare the effects of market volatilities on Environmental Control and WB Burgers 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 Environmental Control with a short position of WB Burgers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Environmental Control and WB Burgers.

Diversification Opportunities for Environmental Control and WB Burgers

0.0

Correlation Coefficient

Environmental Control  WB Burgers

Pay attention - limited upside

The 3 months correlation between Environmental and WBBA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Environmental Control Corp and WB Burgers Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WB Burgers Asia and Environmental Control 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 Environmental Control Corp are associated (or correlated) with WB Burgers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WB Burgers Asia has no effect on the direction of Environmental Control i.e., Environmental Control and WB Burgers go up and down completely randomly.

Pair Corralation between Environmental Control and WB Burgers

If you would invest  0.80  in Environmental Control Corp on December 23, 2024 and sell it today you would earn a total of  0.18  from holding Environmental Control Corp or generate 22.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Environmental Control Corp  vs.  WB Burgers Asia

Environmental Control

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Environmental Control Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Environmental Control displayed solid returns over the last few months and may actually be approaching a breakup point.

WB Burgers Asia

Risk-Adjusted Performance

Very Weak

Over the last 90 days WB Burgers Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, WB Burgers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Environmental Control and WB Burgers

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

The idea behind Environmental Control Corp and WB Burgers Asia 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.