Correlation Between EMCOR and Kaltura
Can any of the company-specific risk be diversified away by investing in both EMCOR and Kaltura 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 Kaltura into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Kaltura, you can compare the effects of market volatilities on EMCOR and Kaltura 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 Kaltura. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Kaltura.
Diversification Opportunities for EMCOR and Kaltura
Very poor diversification
The 3 months correlation between EMCOR and Kaltura is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Kaltura in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaltura 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 Kaltura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaltura has no effect on the direction of EMCOR i.e., EMCOR and Kaltura go up and down completely randomly.
Pair Corralation between EMCOR and Kaltura
Considering the 90-day investment horizon EMCOR is expected to generate 1.24 times less return on investment than Kaltura. But when comparing it to its historical volatility, EMCOR Group is 2.25 times less risky than Kaltura. It trades about 0.14 of its potential returns per unit of risk. Kaltura is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 133.00 in Kaltura on August 27, 2024 and sell it today you would earn a total of 77.00 from holding Kaltura or generate 57.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Kaltura
Performance |
| Timeline |
| EMCOR Group |
| Kaltura |
EMCOR and Kaltura Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Kaltura
The main advantage of trading using opposite EMCOR and Kaltura positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Kaltura 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 Kaltura will offset losses from the drop in Kaltura's long position.The idea behind EMCOR Group and Kaltura 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.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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