Correlation Between Emerging Display and CKM Building

Can any of the company-specific risk be diversified away by investing in both Emerging Display and CKM Building 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 Emerging Display and CKM Building into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Emerging Display Technologies and CKM Building Material, you can compare the effects of market volatilities on Emerging Display and CKM Building 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 Emerging Display with a short position of CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Display and CKM Building.

Diversification Opportunities for Emerging Display and CKM Building

0.36

Correlation Coefficient

Emerging Display  CKM Building

Weak diversification

The 3 months correlation between Emerging and CKM is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Display Technologies and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material and Emerging Display 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 Emerging Display Technologies are associated (or correlated) with CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Emerging Display i.e., Emerging Display and CKM Building go up and down completely randomly.

Pair Corralation between Emerging Display and CKM Building

Assuming the 90 days trading horizon Emerging Display Technologies is expected to generate 1.46 times more return on investment than CKM Building. However, Emerging Display is 1.46 times more volatile than CKM Building Material. It trades about 0.46 of its potential returns per unit of risk. CKM Building Material is currently generating about 0.08 per unit of risk. If you would invest  2,635  in Emerging Display Technologies on December 5, 2024 and sell it today you would earn a total of  250.00  from holding Emerging Display Technologies or generate 9.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Emerging Display Technologies  vs.  CKM Building Material

Emerging Display Tec

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Display Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Emerging Display may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CKM Building Material

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CKM Building Material are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CKM Building may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Emerging Display and CKM Building

The main advantage of trading using opposite Emerging Display and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Display position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building's long position.

The idea behind Emerging Display Technologies and CKM Building Material 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.