Correlation Between EcoPlus and OriginClear

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

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

Diversification Opportunities for EcoPlus and OriginClear

0.47

Correlation Coefficient

EcoPlus  OriginClear

Very weak diversification

The 3 months correlation between EcoPlus and OriginClear is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding EcoPlus and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear and EcoPlus 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 EcoPlus are associated (or correlated) with OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of EcoPlus i.e., EcoPlus and OriginClear go up and down completely randomly.

Pair Corralation between EcoPlus and OriginClear

Given the investment horizon of 90 days EcoPlus is expected to generate 1.22 times more return on investment than OriginClear. However, EcoPlus is 1.22 times more volatile than OriginClear. It trades about 0.03 of its potential returns per unit of risk. OriginClear is currently generating about 0.03 per unit of risk. If you would invest  1.30  in EcoPlus on January 11, 2025 and sell it today you would lose (0.30) from holding EcoPlus or give up 23.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

EcoPlus  vs.  OriginClear

EcoPlus

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EcoPlus are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, EcoPlus disclosed solid returns over the last few months and may actually be approaching a breakup point.

OriginClear

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OriginClear are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, OriginClear displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EcoPlus and OriginClear

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

The idea behind EcoPlus and OriginClear 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.