Correlation Between Emerge Commerce and ASOS Plc
Can any of the company-specific risk be diversified away by investing in both Emerge Commerce and ASOS Plc 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 Emerge Commerce and ASOS Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerge Commerce and ASOS plc PK, you can compare the effects of market volatilities on Emerge Commerce and ASOS Plc 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 Emerge Commerce with a short position of ASOS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerge Commerce and ASOS Plc.
Diversification Opportunities for Emerge Commerce and ASOS Plc
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Emerge and ASOS is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Emerge Commerce and ASOS plc PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS plc PK and Emerge Commerce 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 Emerge Commerce are associated (or correlated) with ASOS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS plc PK has no effect on the direction of Emerge Commerce i.e., Emerge Commerce and ASOS Plc go up and down completely randomly.
Pair Corralation between Emerge Commerce and ASOS Plc
Assuming the 90 days horizon Emerge Commerce is expected to generate 12.58 times more return on investment than ASOS Plc. However, Emerge Commerce is 12.58 times more volatile than ASOS plc PK. It trades about 0.04 of its potential returns per unit of risk. ASOS plc PK is currently generating about 0.0 per unit of risk. If you would invest 13.00 in Emerge Commerce on September 3, 2024 and sell it today you would lose (10.49) from holding Emerge Commerce or give up 80.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerge Commerce vs. ASOS plc PK
Performance |
| Timeline |
| Emerge Commerce |
| ASOS plc PK |
Emerge Commerce and ASOS Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerge Commerce and ASOS Plc
The main advantage of trading using opposite Emerge Commerce and ASOS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerge Commerce position performs unexpectedly, ASOS Plc 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 ASOS Plc will offset losses from the drop in ASOS Plc's long position.| Emerge Commerce vs. Phonex Inc | Emerge Commerce vs. Delivery Hero SE | Emerge Commerce vs. 1StdibsCom | Emerge Commerce vs. Natural Health Trend |
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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