Correlation Between Eurotech SpA and Corporate Office

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

By analyzing existing cross correlation between Eurotech SpA and Corporate Office Properties, you can compare the effects of market volatilities on Eurotech SpA and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurotech SpA and Corporate Office.

Diversification Opportunities for Eurotech SpA and Corporate Office

0.37

Correlation Coefficient

Eurotech SpA  Corporate Office

Weak diversification

The 3 months correlation between Eurotech and Corporate is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Eurotech SpA and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Eurotech SpA i.e., Eurotech SpA and Corporate Office go up and down completely randomly.

Pair Corralation between Eurotech SpA and Corporate Office

Assuming the 90 days horizon Eurotech SpA is expected to generate 2.28 times more return on investment than Corporate Office. However, Eurotech SpA is 2.28 times more volatile than Corporate Office Properties. It trades about 0.17 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.05 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eurotech SpA  vs.  Corporate Office Properties

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.

Corporate Office Pro

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Office Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Corporate Office is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Eurotech SpA and Corporate Office

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

The idea behind Eurotech SpA and Corporate Office Properties 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.