Correlation Between Total Produce and Echo Therapeutics

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

By analyzing existing cross correlation between Total Produce Plc and Echo Therapeutics, you can compare the effects of market volatilities on Total Produce and Echo Therapeutics 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 Total Produce with a short position of Echo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Produce and Echo Therapeutics.

Diversification Opportunities for Total Produce and Echo Therapeutics

0.0

Correlation Coefficient

Total Produce  Echo Therapeutics

Pay attention - limited upside

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

Pair Corralation between Total Produce and Echo Therapeutics

If you would invest (100.00) in Echo Therapeutics on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Echo Therapeutics or generate -100.0% return on investment over 90 days.

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

Total Produce Plc  vs.  Echo Therapeutics

Total Produce Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Total Produce Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Total Produce is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Echo Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Total Produce and Echo Therapeutics

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

The idea behind Total Produce Plc and Echo Therapeutics 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.