Correlation Between Eurotech SpA and GURU ORGANIC

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

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

Diversification Opportunities for Eurotech SpA and GURU ORGANIC

-0.09

Correlation Coefficient

Eurotech SpA  GURU ORGANIC

Good diversification

The 3 months correlation between Eurotech and GURU is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eurotech SpA and GURU ORGANIC ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GURU ORGANIC ENERGY and Eurotech SpA 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 Eurotech SpA are associated (or correlated) with GURU ORGANIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GURU ORGANIC ENERGY has no effect on the direction of Eurotech SpA i.e., Eurotech SpA and GURU ORGANIC go up and down completely randomly.

Pair Corralation between Eurotech SpA and GURU ORGANIC

Assuming the 90 days horizon Eurotech SpA is expected to generate 0.82 times more return on investment than GURU ORGANIC. However, Eurotech SpA is 1.22 times less risky than GURU ORGANIC. It trades about 0.17 of its potential returns per unit of risk. GURU ORGANIC ENERGY is currently generating about 0.06 per unit of risk. If you would invest  66.00  in Eurotech SpA on April 24, 2025 and sell it today you would earn a total of  22.00  from holding Eurotech SpA or generate 33.33% return on investment over 90 days.

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

Eurotech SpA  vs.  GURU ORGANIC ENERGY

Eurotech SpA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurotech SpA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eurotech SpA reported solid returns over the last few months and may actually be approaching a breakup point.

GURU ORGANIC ENERGY

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GURU ORGANIC ENERGY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GURU ORGANIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eurotech SpA and GURU ORGANIC

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

The idea behind Eurotech SpA and GURU ORGANIC 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.