Correlation Between ECHO INVESTMENT and BASF SE

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Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and BASF SE 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 BASF SE 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 BASF SE, you can compare the effects of market volatilities on ECHO INVESTMENT and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and BASF SE.

Diversification Opportunities for ECHO INVESTMENT and BASF SE

0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between ECHO and BASF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and BASF SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and BASF SE go up and down completely randomly.

Pair Corralation between ECHO INVESTMENT and BASF SE

Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to generate 1.14 times more return on investment than BASF SE. However, ECHO INVESTMENT is 1.14 times more volatile than BASF SE. It trades about 0.12 of its potential returns per unit of risk. BASF SE is currently generating about 0.05 per unit of risk. If you would invest  106.00  in ECHO INVESTMENT ZY on April 20, 2025 and sell it today you would earn a total of  13.00  from holding ECHO INVESTMENT ZY or generate 12.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

ECHO INVESTMENT ZY  vs.  BASF SE

 Performance 
       Timeline  
ECHO INVESTMENT ZY 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 9 (%) 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.
BASF SE 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BASF SE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ECHO INVESTMENT and BASF SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ECHO INVESTMENT and BASF SE

The main advantage of trading using opposite ECHO INVESTMENT and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.
The idea behind ECHO INVESTMENT ZY and BASF SE 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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