Correlation Between Autosports and EMvision Medical

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

By analyzing existing cross correlation between Autosports Group and EMvision Medical Devices, you can compare the effects of market volatilities on Autosports and EMvision Medical 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 Autosports with a short position of EMvision Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and EMvision Medical.

Diversification Opportunities for Autosports and EMvision Medical

0.63

Correlation Coefficient

Autosports  EMvision Medical

Poor diversification

The 3 months correlation between Autosports and EMvision is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices and Autosports 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 Autosports Group are associated (or correlated) with EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of Autosports i.e., Autosports and EMvision Medical go up and down completely randomly.

Pair Corralation between Autosports and EMvision Medical

Assuming the 90 days trading horizon Autosports Group is expected to under-perform the EMvision Medical. But the stock apears to be less risky and, when comparing its historical volatility, Autosports Group is 1.68 times less risky than EMvision Medical. The stock trades about -0.21 of its potential returns per unit of risk. The EMvision Medical Devices is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  212.00  in EMvision Medical Devices on October 6, 2024 and sell it today you would lose (24.00) from holding EMvision Medical Devices or give up 11.32% of portfolio value over 90 days.

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

Autosports Group  vs.  EMvision Medical Devices

Autosports Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autosports Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EMvision Medical Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMvision Medical Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Autosports and EMvision Medical

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

The idea behind Autosports Group and EMvision Medical Devices 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.