Correlation Between EMCOR and Kingsmen Creatives
Can any of the company-specific risk be diversified away by investing in both EMCOR and Kingsmen Creatives 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 Kingsmen Creatives into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Kingsmen Creatives, you can compare the effects of market volatilities on EMCOR and Kingsmen Creatives 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 Kingsmen Creatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Kingsmen Creatives.
Diversification Opportunities for EMCOR and Kingsmen Creatives
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EMCOR and Kingsmen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Kingsmen Creatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen Creatives 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 Kingsmen Creatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen Creatives has no effect on the direction of EMCOR i.e., EMCOR and Kingsmen Creatives go up and down completely randomly.
Pair Corralation between EMCOR and Kingsmen Creatives
Considering the 90-day investment horizon EMCOR Group is expected to generate 1.22 times more return on investment than Kingsmen Creatives. However, EMCOR is 1.22 times more volatile than Kingsmen Creatives. It trades about 0.09 of its potential returns per unit of risk. Kingsmen Creatives is currently generating about -0.04 per unit of risk. If you would invest 38,081 in EMCOR Group on September 19, 2024 and sell it today you would earn a total of 9,609 from holding EMCOR Group or generate 25.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EMCOR Group vs. Kingsmen Creatives
Performance |
| Timeline |
| EMCOR Group |
| Kingsmen Creatives |
EMCOR and Kingsmen Creatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Kingsmen Creatives
The main advantage of trading using opposite EMCOR and Kingsmen Creatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Kingsmen Creatives 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 Kingsmen Creatives will offset losses from the drop in Kingsmen Creatives' long position.The idea behind EMCOR Group and Kingsmen Creatives 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.| Kingsmen Creatives vs. Cleantech Power Corp | Kingsmen Creatives vs. EMCOR Group | Kingsmen Creatives vs. Keurig Dr Pepper | Kingsmen Creatives vs. CECO Environmental Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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