Correlation Between Empire State and Communication Cable
Can any of the company-specific risk be diversified away by investing in both Empire State and Communication Cable 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 Empire State and Communication Cable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Communication Cable Systems, you can compare the effects of market volatilities on Empire State and Communication Cable 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 Empire State with a short position of Communication Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Communication Cable.
Diversification Opportunities for Empire State and Communication Cable
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Communication is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Communication Cable Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Communication Cable and Empire State 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 Empire State Realty are associated (or correlated) with Communication Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Communication Cable has no effect on the direction of Empire State i.e., Empire State and Communication Cable go up and down completely randomly.
Pair Corralation between Empire State and Communication Cable
Given the investment horizon of 90 days Empire State Realty is expected to generate 0.55 times more return on investment than Communication Cable. However, Empire State Realty is 1.8 times less risky than Communication Cable. It trades about 0.06 of its potential returns per unit of risk. Communication Cable Systems is currently generating about -0.07 per unit of risk. If you would invest 871.00 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 225.00 from holding Empire State Realty or generate 25.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.17% |
| Values | Daily Returns |
Empire State Realty vs. Communication Cable Systems
Performance |
| Timeline |
| Empire State Realty |
| Communication Cable |
Empire State and Communication Cable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Communication Cable
The main advantage of trading using opposite Empire State and Communication Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Communication Cable 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 Communication Cable will offset losses from the drop in Communication Cable's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Communication Cable vs. Berkah Prima Perkasa | Communication Cable vs. Hartadinata Abadi Tbk | Communication Cable vs. Estika Tata Tiara | Communication Cable vs. Garudafood Putra Putri |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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