Correlation Between Advanced Braking and Embark Education

Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Embark Education 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 Advanced Braking and Embark Education into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advanced Braking Technology and Embark Education Group, you can compare the effects of market volatilities on Advanced Braking and Embark Education 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 Advanced Braking with a short position of Embark Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Embark Education.

Diversification Opportunities for Advanced Braking and Embark Education

0.02

Correlation Coefficient

Advanced Braking  Embark Education

Significant diversification

The 3 months correlation between Advanced and Embark is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Embark Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Education and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Embark Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Education has no effect on the direction of Advanced Braking i.e., Advanced Braking and Embark Education go up and down completely randomly.

Pair Corralation between Advanced Braking and Embark Education

Assuming the 90 days trading horizon Advanced Braking Technology is expected to under-perform the Embark Education. In addition to that, Advanced Braking is 2.35 times more volatile than Embark Education Group. It trades about -0.06 of its total potential returns per unit of risk. Embark Education Group is currently generating about -0.05 per unit of volatility. If you would invest  81.00  in Embark Education Group on October 22, 2024 and sell it today you would lose (2.00) from holding Embark Education Group or give up 2.47% of portfolio value over 90 days.

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

Advanced Braking Technology  vs.  Embark Education Group

Advanced Braking Tec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Braking Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Advanced Braking may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Embark Education

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Embark Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Embark Education is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Advanced Braking and Embark Education

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

The idea behind Advanced Braking Technology and Embark Education Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.