Correlation Between Eco Innovation and Interact

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

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

Diversification Opportunities for Eco Innovation and Interact

0.19

Correlation Coefficient

Eco Innovation  Interact

Average diversification

The 3 months correlation between Eco and Interact is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Eco Innovation Group and Interact TV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interact TV and Eco Innovation 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 Innovation Group are associated (or correlated) with Interact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interact TV has no effect on the direction of Eco Innovation i.e., Eco Innovation and Interact go up and down completely randomly.

Pair Corralation between Eco Innovation and Interact

Given the investment horizon of 90 days Eco Innovation is expected to generate 18.21 times less return on investment than Interact. But when comparing it to its historical volatility, Eco Innovation Group is 8.89 times less risky than Interact. It trades about 0.08 of its potential returns per unit of risk. Interact TV is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Interact TV on May 1, 2025 and sell it today you would lose (0.01) from holding Interact TV or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Eco Innovation Group  vs.  Interact TV

Eco Innovation Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Innovation Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Eco Innovation showed solid returns over the last few months and may actually be approaching a breakup point.

Interact TV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interact TV are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Interact demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eco Innovation and Interact

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

The idea behind Eco Innovation Group and Interact TV 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.

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 the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.