Correlation Between Eastern and Smart Digital

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

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

Diversification Opportunities for Eastern and Smart Digital

-0.05

Correlation Coefficient

Eastern  Smart Digital

Good diversification

The 3 months correlation between Eastern and Smart is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Smart Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Digital Group and Eastern 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 Eastern Co are associated (or correlated) with Smart Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Digital Group has no effect on the direction of Eastern i.e., Eastern and Smart Digital go up and down completely randomly.

Pair Corralation between Eastern and Smart Digital

Considering the 90-day investment horizon Eastern Co is expected to under-perform the Smart Digital. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Co is 6.77 times less risky than Smart Digital. The stock trades about -0.06 of its potential returns per unit of risk. The Smart Digital Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  472.00  in Smart Digital Group on May 18, 2025 and sell it today you would earn a total of  769.00  from holding Smart Digital Group or generate 162.92% return on investment over 90 days.

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

Eastern Co  vs.  Smart Digital Group

Eastern

Risk-Adjusted Performance

Weakest

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Smart Digital Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastern and Smart Digital

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

The idea behind Eastern Co and Smart Digital Group 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.