Correlation Between THORNEY TECHS and EMERSON ELECTRIC
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and EMERSON ELECTRIC 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 THORNEY TECHS and EMERSON ELECTRIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and EMERSON ELECTRIC, you can compare the effects of market volatilities on THORNEY TECHS and EMERSON ELECTRIC 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 THORNEY TECHS with a short position of EMERSON ELECTRIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and EMERSON ELECTRIC.
Diversification Opportunities for THORNEY TECHS and EMERSON ELECTRIC
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THORNEY and EMERSON is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and EMERSON ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMERSON ELECTRIC and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with EMERSON ELECTRIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMERSON ELECTRIC has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and EMERSON ELECTRIC go up and down completely randomly.
Pair Corralation between THORNEY TECHS and EMERSON ELECTRIC
Assuming the 90 days horizon THORNEY TECHS LTD is expected to under-perform the EMERSON ELECTRIC. In addition to that, THORNEY TECHS is 3.16 times more volatile than EMERSON ELECTRIC. It trades about -0.05 of its total potential returns per unit of risk. EMERSON ELECTRIC is currently generating about 0.14 per unit of volatility. If you would invest 12,026 in EMERSON ELECTRIC on September 13, 2024 and sell it today you would earn a total of 420.00 from holding EMERSON ELECTRIC or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. EMERSON ELECTRIC
Performance |
| Timeline |
| THORNEY TECHS LTD |
| EMERSON ELECTRIC |
THORNEY TECHS and EMERSON ELECTRIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and EMERSON ELECTRIC
The main advantage of trading using opposite THORNEY TECHS and EMERSON ELECTRIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS position performs unexpectedly, EMERSON ELECTRIC 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 ELECTRIC will offset losses from the drop in EMERSON ELECTRIC's long position.| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
| EMERSON ELECTRIC vs. Australian Agricultural | EMERSON ELECTRIC vs. Singapore Telecommunications Limited | EMERSON ELECTRIC vs. H FARM SPA | EMERSON ELECTRIC vs. North American Construction |
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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