Correlation Between ECHO INVESTMENT and CN ALUMINUM

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

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

Diversification Opportunities for ECHO INVESTMENT and CN ALUMINUM

0.82

Correlation Coefficient

ECHO INVESTMENT  CN ALUMINUM

Very poor diversification

The 3 months correlation between ECHO and 4AI is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and CN ALUMINUM INT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN ALUMINUM INT and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with CN ALUMINUM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN ALUMINUM INT has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and CN ALUMINUM go up and down completely randomly.

Pair Corralation between ECHO INVESTMENT and CN ALUMINUM

Assuming the 90 days horizon ECHO INVESTMENT is expected to generate 3.16 times less return on investment than CN ALUMINUM. But when comparing it to its historical volatility, ECHO INVESTMENT ZY is 1.91 times less risky than CN ALUMINUM. It trades about 0.1 of its potential returns per unit of risk. CN ALUMINUM INT is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  20.00  in CN ALUMINUM INT on April 23, 2025 and sell it today you would earn a total of  7.00  from holding CN ALUMINUM INT or generate 35.0% return on investment over 90 days.

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

ECHO INVESTMENT ZY  vs.  CN ALUMINUM INT

ECHO INVESTMENT ZY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ECHO INVESTMENT may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CN ALUMINUM INT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CN ALUMINUM INT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, CN ALUMINUM exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ECHO INVESTMENT and CN ALUMINUM

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

The idea behind ECHO INVESTMENT ZY and CN ALUMINUM INT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.