Correlation Between EOSDAC and SRM

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

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

Diversification Opportunities for EOSDAC and SRM

-0.4

Correlation Coefficient

EOSDAC  SRM

Very good diversification

The 3 months correlation between EOSDAC and SRM is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding EOSDAC and SRM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRM 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 SRM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRM has no effect on the direction of EOSDAC i.e., EOSDAC and SRM go up and down completely randomly.

Pair Corralation between EOSDAC and SRM

Assuming the 90 days trading horizon EOSDAC is expected to generate 0.74 times more return on investment than SRM. However, EOSDAC is 1.35 times less risky than SRM. It trades about 0.21 of its potential returns per unit of risk. SRM is currently generating about -0.02 per unit of risk. If you would invest  0.02  in EOSDAC on April 20, 2025 and sell it today you would earn a total of  0.01  from holding EOSDAC or generate 60.63% return on investment over 90 days.

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

EOSDAC  vs.  SRM

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.

SRM

Risk-Adjusted Performance

Very Weak

Over the last 90 days SRM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for SRM shareholders.

Pair Trading with EOSDAC and SRM

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

The idea behind EOSDAC and SRM 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.