Correlation Between Linkage Global and EMCOR
Can any of the company-specific risk be diversified away by investing in both Linkage Global and EMCOR 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 Linkage Global and EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linkage Global Ordinary and EMCOR Group, you can compare the effects of market volatilities on Linkage Global and EMCOR 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 Linkage Global with a short position of EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linkage Global and EMCOR.
Diversification Opportunities for Linkage Global and EMCOR
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Linkage and EMCOR is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Linkage Global Ordinary and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Linkage Global 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 Linkage Global Ordinary are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Linkage Global i.e., Linkage Global and EMCOR go up and down completely randomly.
Pair Corralation between Linkage Global and EMCOR
Given the investment horizon of 90 days Linkage Global Ordinary is expected to under-perform the EMCOR. In addition to that, Linkage Global is 6.02 times more volatile than EMCOR Group. It trades about -0.23 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.32 per unit of volatility. If you would invest 35,843 in EMCOR Group on August 31, 2024 and sell it today you would earn a total of 14,952 from holding EMCOR Group or generate 41.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linkage Global Ordinary vs. EMCOR Group
Performance |
| Timeline |
| Linkage Global Ordinary |
| EMCOR Group |
Linkage Global and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linkage Global and EMCOR
The main advantage of trading using opposite Linkage Global and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linkage Global position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR's long position.| Linkage Global vs. Citizens | Linkage Global vs. Hurco Companies | Linkage Global vs. Aegon NV ADR | Linkage Global vs. Cincinnati Financial |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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