Correlation Between EBEST Investment and AhnLab

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

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

Diversification Opportunities for EBEST Investment and AhnLab

-0.73

Correlation Coefficient

EBEST Investment  AhnLab

Pay attention - limited upside

The 3 months correlation between EBEST and AhnLab is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and AhnLab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AhnLab Inc and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with AhnLab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AhnLab Inc has no effect on the direction of EBEST Investment i.e., EBEST Investment and AhnLab go up and down completely randomly.

Pair Corralation between EBEST Investment and AhnLab

Assuming the 90 days trading horizon EBEST Investment Securities is expected to generate 3.81 times more return on investment than AhnLab. However, EBEST Investment is 3.81 times more volatile than AhnLab Inc. It trades about 0.04 of its potential returns per unit of risk. AhnLab Inc is currently generating about -0.29 per unit of risk. If you would invest  501,000  in EBEST Investment Securities on March 19, 2024 and sell it today you would earn a total of  6,000  from holding EBEST Investment Securities or generate 1.2% return on investment over 90 days.

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

EBEST Investment Securities  vs.  AhnLab Inc

EBEST Investment Sec

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EBEST Investment Securities are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EBEST Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

AhnLab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AhnLab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite 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.

Pair Trading with EBEST Investment and AhnLab

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

The idea behind EBEST Investment Securities and AhnLab Inc 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.