Correlation Between EyecityCom and Allied Energy

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

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

Diversification Opportunities for EyecityCom and Allied Energy

0.6

Correlation Coefficient

EyecityCom  Allied Energy

Poor diversification

The 3 months correlation between EyecityCom and Allied is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding EyecityCom and Allied Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Energy and EyecityCom 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 EyecityCom are associated (or correlated) with Allied Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Energy has no effect on the direction of EyecityCom i.e., EyecityCom and Allied Energy go up and down completely randomly.

Pair Corralation between EyecityCom and Allied Energy

Given the investment horizon of 90 days EyecityCom is expected to generate 1.59 times more return on investment than Allied Energy. However, EyecityCom is 1.59 times more volatile than Allied Energy. It trades about 0.05 of its potential returns per unit of risk. Allied Energy is currently generating about 0.0 per unit of risk. If you would invest  0.05  in EyecityCom on May 5, 2025 and sell it today you would lose (0.02) from holding EyecityCom or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

EyecityCom  vs.  Allied Energy

EyecityCom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EyecityCom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, EyecityCom showed solid returns over the last few months and may actually be approaching a breakup point.

Allied Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allied Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Allied Energy is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with EyecityCom and Allied Energy

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

The idea behind EyecityCom and Allied Energy 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.