Correlation Between EMvision Medical and Energy Technologies
Can any of the company-specific risk be diversified away by investing in both EMvision Medical and Energy Technologies 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 EMvision Medical and Energy Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EMvision Medical Devices and Energy Technologies Limited, you can compare the effects of market volatilities on EMvision Medical and Energy Technologies 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 EMvision Medical with a short position of Energy Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMvision Medical and Energy Technologies.
Diversification Opportunities for EMvision Medical and Energy Technologies
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EMvision and Energy is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding EMvision Medical Devices and Energy Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Technologies and EMvision Medical 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 EMvision Medical Devices are associated (or correlated) with Energy Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Technologies has no effect on the direction of EMvision Medical i.e., EMvision Medical and Energy Technologies go up and down completely randomly.
Pair Corralation between EMvision Medical and Energy Technologies
Assuming the 90 days trading horizon EMvision Medical Devices is expected to under-perform the Energy Technologies. In addition to that, EMvision Medical is 4.7 times more volatile than Energy Technologies Limited. It trades about -0.06 of its total potential returns per unit of risk. Energy Technologies Limited is currently generating about 0.21 per unit of volatility. If you would invest 3.00 in Energy Technologies Limited on August 29, 2024 and sell it today you would earn a total of 0.10 from holding Energy Technologies Limited or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EMvision Medical Devices vs. Energy Technologies Limited
Performance |
| Timeline |
| EMvision Medical Devices |
| Energy Technologies |
EMvision Medical and Energy Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EMvision Medical and Energy Technologies
The main advantage of trading using opposite EMvision Medical and Energy Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMvision Medical position performs unexpectedly, Energy Technologies 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 Energy Technologies will offset losses from the drop in Energy Technologies' long position.| EMvision Medical vs. Westpac Banking | EMvision Medical vs. Champion Iron | EMvision Medical vs. Ridley | EMvision Medical vs. Peel Mining |
| Energy Technologies vs. Treasury Wine Estates | Energy Technologies vs. Global Health | Energy Technologies vs. Healthco Healthcare and | Energy Technologies vs. EMvision Medical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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