Correlation Between EMPEROR ENT and CPU SOFTWAREHOUSE
Can any of the company-specific risk be diversified away by investing in both EMPEROR ENT and CPU SOFTWAREHOUSE 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 EMPEROR ENT and CPU SOFTWAREHOUSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMPEROR ENT HOTEL and CPU SOFTWAREHOUSE, you can compare the effects of market volatilities on EMPEROR ENT and CPU SOFTWAREHOUSE 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 EMPEROR ENT with a short position of CPU SOFTWAREHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMPEROR ENT and CPU SOFTWAREHOUSE.
Diversification Opportunities for EMPEROR ENT and CPU SOFTWAREHOUSE
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EMPEROR and CPU is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding EMPEROR ENT HOTEL and CPU SOFTWAREHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPU SOFTWAREHOUSE and EMPEROR ENT 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 EMPEROR ENT HOTEL are associated (or correlated) with CPU SOFTWAREHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPU SOFTWAREHOUSE has no effect on the direction of EMPEROR ENT i.e., EMPEROR ENT and CPU SOFTWAREHOUSE go up and down completely randomly.
Pair Corralation between EMPEROR ENT and CPU SOFTWAREHOUSE
Assuming the 90 days trading horizon EMPEROR ENT HOTEL is expected to under-perform the CPU SOFTWAREHOUSE. But the stock apears to be less risky and, when comparing its historical volatility, EMPEROR ENT HOTEL is 4.75 times less risky than CPU SOFTWAREHOUSE. The stock trades about -0.18 of its potential returns per unit of risk. The CPU SOFTWAREHOUSE is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 91.00 in CPU SOFTWAREHOUSE on October 11, 2024 and sell it today you would earn a total of 16.00 from holding CPU SOFTWAREHOUSE or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMPEROR ENT HOTEL vs. CPU SOFTWAREHOUSE
Performance |
| Timeline |
| EMPEROR ENT HOTEL |
| CPU SOFTWAREHOUSE |
EMPEROR ENT and CPU SOFTWAREHOUSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMPEROR ENT and CPU SOFTWAREHOUSE
The main advantage of trading using opposite EMPEROR ENT and CPU SOFTWAREHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMPEROR ENT position performs unexpectedly, CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE will offset losses from the drop in CPU SOFTWAREHOUSE's long position.| EMPEROR ENT vs. PURETECH HEALTH PLC | EMPEROR ENT vs. Planet Fitness | EMPEROR ENT vs. Acadia Healthcare | EMPEROR ENT vs. AXWAY SOFTWARE EO |
| CPU SOFTWAREHOUSE vs. BG Foods | CPU SOFTWAREHOUSE vs. EMPEROR ENT HOTEL | CPU SOFTWAREHOUSE vs. EBRO FOODS | CPU SOFTWAREHOUSE vs. Dalata Hotel Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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