Correlation Between EJF Investments and Central Asia

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

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

Diversification Opportunities for EJF Investments and Central Asia

-0.14

Correlation Coefficient

EJF Investments  Central Asia

Good diversification

The 3 months correlation between EJF and Central is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding EJF Investments and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and EJF Investments 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 EJF Investments are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of EJF Investments i.e., EJF Investments and Central Asia go up and down completely randomly.

Pair Corralation between EJF Investments and Central Asia

Assuming the 90 days trading horizon EJF Investments is expected to generate 0.72 times more return on investment than Central Asia. However, EJF Investments is 1.39 times less risky than Central Asia. It trades about 0.05 of its potential returns per unit of risk. Central Asia Metals is currently generating about 0.01 per unit of risk. If you would invest  8,860  in EJF Investments on April 24, 2025 and sell it today you would earn a total of  3,140  from holding EJF Investments or generate 35.44% return on investment over 90 days.

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

EJF Investments  vs.  Central Asia Metals

EJF Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EJF Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Central Asia Metals

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Asia Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Central Asia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EJF Investments and Central Asia

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

The idea behind EJF Investments and Central Asia Metals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.