Correlation Between EMCOR and Eshallgo
Can any of the company-specific risk be diversified away by investing in both EMCOR and Eshallgo 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 EMCOR and Eshallgo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Eshallgo Class A, you can compare the effects of market volatilities on EMCOR and Eshallgo 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 EMCOR with a short position of Eshallgo. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Eshallgo.
Diversification Opportunities for EMCOR and Eshallgo
Poor diversification
The 3 months correlation between EMCOR and Eshallgo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Eshallgo Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eshallgo Class A and EMCOR 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 EMCOR Group are associated (or correlated) with Eshallgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eshallgo Class A has no effect on the direction of EMCOR i.e., EMCOR and Eshallgo go up and down completely randomly.
Pair Corralation between EMCOR and Eshallgo
Considering the 90-day investment horizon EMCOR is expected to generate 31.8 times less return on investment than Eshallgo. But when comparing it to its historical volatility, EMCOR Group is 52.75 times less risky than Eshallgo. It trades about 0.17 of its potential returns per unit of risk. Eshallgo Class A is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Eshallgo Class A on August 31, 2024 and sell it today you would earn a total of 365.00 from holding Eshallgo Class A or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 28.88% |
| Values | Daily Returns |
EMCOR Group vs. Eshallgo Class A
Performance |
| Timeline |
| EMCOR Group |
| Eshallgo Class A |
EMCOR and Eshallgo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Eshallgo
The main advantage of trading using opposite EMCOR and Eshallgo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Eshallgo 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 Eshallgo will offset losses from the drop in Eshallgo's long position.The idea behind EMCOR Group and Eshallgo Class A 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.| Eshallgo vs. ServiceNow | Eshallgo vs. Ecolab Inc | Eshallgo vs. Sensient Technologies | Eshallgo vs. Analog Devices |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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