Correlation Between EOSDAC and LRC

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

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

Diversification Opportunities for EOSDAC and LRC

-0.18

Correlation Coefficient

EOSDAC  LRC

Good diversification

The 3 months correlation between EOSDAC and LRC is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and LRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LRC and EOSDAC 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 EOSDAC are associated (or correlated) with LRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LRC has no effect on the direction of EOSDAC i.e., EOSDAC and LRC go up and down completely randomly.

Pair Corralation between EOSDAC and LRC

Assuming the 90 days trading horizon EOSDAC is expected to generate 0.75 times more return on investment than LRC. However, EOSDAC is 1.33 times less risky than LRC. It trades about 0.21 of its potential returns per unit of risk. LRC is currently generating about -0.02 per unit of risk. If you would invest  0.02  in EOSDAC on April 23, 2025 and sell it today you would earn a total of  0.01  from holding EOSDAC or generate 59.56% return on investment over 90 days.

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

EOSDAC  vs.  LRC

EOSDAC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EOSDAC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, EOSDAC sustained solid returns over the last few months and may actually be approaching a breakup point.

LRC

Risk-Adjusted Performance

Weak

Over the last 90 days LRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, LRC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EOSDAC and LRC

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

The idea behind EOSDAC and LRC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.