Correlation Between Emerson Radio and INFICON Holding
Can any of the company-specific risk be diversified away by investing in both Emerson Radio and INFICON Holding 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 Emerson Radio and INFICON Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio and INFICON Holding AG, you can compare the effects of market volatilities on Emerson Radio and INFICON Holding 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 Emerson Radio with a short position of INFICON Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and INFICON Holding.
Diversification Opportunities for Emerson Radio and INFICON Holding
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Emerson and INFICON is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and INFICON Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INFICON Holding AG and Emerson Radio 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 Emerson Radio are associated (or correlated) with INFICON Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INFICON Holding AG has no effect on the direction of Emerson Radio i.e., Emerson Radio and INFICON Holding go up and down completely randomly.
Pair Corralation between Emerson Radio and INFICON Holding
Considering the 90-day investment horizon Emerson Radio is expected to under-perform the INFICON Holding. In addition to that, Emerson Radio is 1.4 times more volatile than INFICON Holding AG. It trades about 0.0 of its total potential returns per unit of risk. INFICON Holding AG is currently generating about 0.06 per unit of volatility. If you would invest 72,109 in INFICON Holding AG on September 15, 2024 and sell it today you would earn a total of 53,891 from holding INFICON Holding AG or generate 74.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerson Radio vs. INFICON Holding AG
Performance |
| Timeline |
| Emerson Radio |
| INFICON Holding AG |
Emerson Radio and INFICON Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerson Radio and INFICON Holding
The main advantage of trading using opposite Emerson Radio and INFICON Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, INFICON Holding 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 INFICON Holding will offset losses from the drop in INFICON Holding's long position.| Emerson Radio vs. LG Display Co | Emerson Radio vs. Sony Group Corp | Emerson Radio vs. Universal Electronics | Emerson Radio vs. VOXX International |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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