Correlation Between Acacia Res-Acacia and Eurodry

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Can any of the company-specific risk be diversified away by investing in both Acacia Res-Acacia and Eurodry 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 Acacia Res-Acacia and Eurodry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acacia Res-Acacia and Eurodry, you can compare the effects of market volatilities on Acacia Res-Acacia and Eurodry 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 Acacia Res-Acacia with a short position of Eurodry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acacia Res-Acacia and Eurodry.

Diversification Opportunities for Acacia Res-Acacia and Eurodry

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Acacia and Eurodry is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Acacia Res-Acacia and Eurodry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurodry and Acacia Res-Acacia 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 Acacia Res-Acacia are associated (or correlated) with Eurodry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurodry has no effect on the direction of Acacia Res-Acacia i.e., Acacia Res-Acacia and Eurodry go up and down completely randomly.

Pair Corralation between Acacia Res-Acacia and Eurodry

Given the investment horizon of 90 days Acacia Res-Acacia is expected to under-perform the Eurodry. But the stock apears to be less risky and, when comparing its historical volatility, Acacia Res-Acacia is 3.27 times less risky than Eurodry. The stock trades about -0.19 of its potential returns per unit of risk. The Eurodry is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,381  in Eurodry on July 4, 2022 and sell it today you would lose (81.00)  from holding Eurodry or give up 5.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Acacia Res-Acacia  vs.  Eurodry

 Performance (%) 
       Timeline  
Acacia Res-Acacia 
Acacia Performance
0 of 100
Over the last 90 days Acacia Res-Acacia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Acacia Price Channel

Eurodry 
Eurodry Performance
0 of 100
Over the last 90 days Eurodry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Eurodry Price Channel

Acacia Res-Acacia and Eurodry Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acacia Res-Acacia and Eurodry

The main advantage of trading using opposite Acacia Res-Acacia and Eurodry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acacia Res-Acacia position performs unexpectedly, Eurodry 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 Eurodry will offset losses from the drop in Eurodry's long position.
Acacia Res-Acacia vs. Amazon Inc
The idea behind Acacia Res-Acacia and Eurodry 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.
Eurodry vs. Amazon Inc
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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