Correlation Between Emeco Holdings and Solution Financial
Can any of the company-specific risk be diversified away by investing in both Emeco Holdings and Solution Financial 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 Emeco Holdings and Solution Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emeco Holdings Limited and Solution Financial, you can compare the effects of market volatilities on Emeco Holdings and Solution Financial 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 Emeco Holdings with a short position of Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emeco Holdings and Solution Financial.
Diversification Opportunities for Emeco Holdings and Solution Financial
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Emeco and Solution is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Emeco Holdings Limited and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial and Emeco Holdings 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 Emeco Holdings Limited are associated (or correlated) with Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of Emeco Holdings i.e., Emeco Holdings and Solution Financial go up and down completely randomly.
Pair Corralation between Emeco Holdings and Solution Financial
Assuming the 90 days horizon Emeco Holdings is expected to generate 2.82 times less return on investment than Solution Financial. But when comparing it to its historical volatility, Emeco Holdings Limited is 2.42 times less risky than Solution Financial. It trades about 0.01 of its potential returns per unit of risk. Solution Financial is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Solution Financial on October 21, 2024 and sell it today you would lose (3.00) from holding Solution Financial or give up 13.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Emeco Holdings Limited vs. Solution Financial
Performance |
| Timeline |
| Emeco Holdings |
| Solution Financial |
Emeco Holdings and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emeco Holdings and Solution Financial
The main advantage of trading using opposite Emeco Holdings and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emeco Holdings position performs unexpectedly, Solution Financial 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 Solution Financial will offset losses from the drop in Solution Financial's long position.| Emeco Holdings vs. Alta Equipment Group | Emeco Holdings vs. Black Diamond Group | Emeco Holdings vs. Ashtead Group plc | Emeco Holdings vs. African Discovery Group |
| Solution Financial vs. Ashtead Group plc | Solution Financial vs. African Discovery Group | Solution Financial vs. Emeco Holdings Limited | Solution Financial vs. BOC Aviation Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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