Correlation Between VerifyMe and EMCORE
Can any of the company-specific risk be diversified away by investing in both VerifyMe and EMCORE 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 VerifyMe and EMCORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VerifyMe and EMCORE, you can compare the effects of market volatilities on VerifyMe and EMCORE 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 VerifyMe with a short position of EMCORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of VerifyMe and EMCORE.
Diversification Opportunities for VerifyMe and EMCORE
Excellent diversification
The 3 months correlation between VerifyMe and EMCORE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE and VerifyMe 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 VerifyMe are associated (or correlated) with EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of VerifyMe i.e., VerifyMe and EMCORE go up and down completely randomly.
Pair Corralation between VerifyMe and EMCORE
Given the investment horizon of 90 days VerifyMe is expected to under-perform the EMCORE. But the stock apears to be less risky and, when comparing its historical volatility, VerifyMe is 2.01 times less risky than EMCORE. The stock trades about -0.13 of its potential returns per unit of risk. The EMCORE is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 104.00 in EMCORE on September 2, 2024 and sell it today you would earn a total of 196.00 from holding EMCORE or generate 188.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VerifyMe vs. EMCORE
Performance |
| Timeline |
| VerifyMe |
| EMCORE |
VerifyMe and EMCORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VerifyMe and EMCORE
The main advantage of trading using opposite VerifyMe and EMCORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VerifyMe position performs unexpectedly, EMCORE 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 EMCORE will offset losses from the drop in EMCORE's long position.The idea behind VerifyMe and EMCORE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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