Correlation Between Raytech Holding and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Raytech Holding and Emerson Radio 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 Raytech Holding and Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytech Holding Limited and Emerson Radio, you can compare the effects of market volatilities on Raytech Holding and Emerson Radio 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 Raytech Holding with a short position of Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytech Holding and Emerson Radio.
Diversification Opportunities for Raytech Holding and Emerson Radio
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Raytech and Emerson is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio and Raytech Holding 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 Raytech Holding Limited are associated (or correlated) with Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Raytech Holding i.e., Raytech Holding and Emerson Radio go up and down completely randomly.
Pair Corralation between Raytech Holding and Emerson Radio
Considering the 90-day investment horizon Raytech Holding is expected to generate 1.47 times less return on investment than Emerson Radio. In addition to that, Raytech Holding is 1.77 times more volatile than Emerson Radio. It trades about 0.07 of its total potential returns per unit of risk. Emerson Radio is currently generating about 0.19 per unit of volatility. If you would invest 42.00 in Emerson Radio on October 24, 2024 and sell it today you would earn a total of 9.00 from holding Emerson Radio or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Raytech Holding Limited vs. Emerson Radio
Performance |
| Timeline |
| Raytech Holding |
| Emerson Radio |
Raytech Holding and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytech Holding and Emerson Radio
The main advantage of trading using opposite Raytech Holding and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytech Holding position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Raytech Holding vs. Emerson Radio | Raytech Holding vs. Hollywood Intermediate | Raytech Holding vs. ANTA Sports Products | Raytech Holding vs. Mattel Inc |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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