Correlation Between EMCOR and Skanska AB
Can any of the company-specific risk be diversified away by investing in both EMCOR and Skanska AB 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 Skanska AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMCOR Group and Skanska AB ser, you can compare the effects of market volatilities on EMCOR and Skanska AB 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 Skanska AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMCOR and Skanska AB.
Diversification Opportunities for EMCOR and Skanska AB
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EMCOR and Skanska is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Skanska AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skanska AB ser 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 Skanska AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skanska AB ser has no effect on the direction of EMCOR i.e., EMCOR and Skanska AB go up and down completely randomly.
Pair Corralation between EMCOR and Skanska AB
Considering the 90-day investment horizon EMCOR Group is expected to generate 1.53 times more return on investment than Skanska AB. However, EMCOR is 1.53 times more volatile than Skanska AB ser. It trades about 0.25 of its potential returns per unit of risk. Skanska AB ser is currently generating about -0.07 per unit of risk. If you would invest 44,611 in EMCOR Group on August 25, 2024 and sell it today you would earn a total of 5,881 from holding EMCOR Group or generate 13.18% 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. Skanska AB ser
Performance |
| Timeline |
| EMCOR Group |
| Skanska AB ser |
EMCOR and Skanska AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMCOR and Skanska AB
The main advantage of trading using opposite EMCOR and Skanska AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMCOR position performs unexpectedly, Skanska AB 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 Skanska AB will offset losses from the drop in Skanska AB's long position.The idea behind EMCOR Group and Skanska AB ser 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.| Skanska AB vs. ACS Actividades De | Skanska AB vs. Arcadis NV | Skanska AB vs. Badger Infrastructure Solutions | Skanska AB vs. Acciona SA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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