Correlation Between Bynordic Acquisition and Emerson Radio

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

By analyzing existing cross correlation between Bynordic Acquisition Corp and Emerson Radio, you can compare the effects of market volatilities on Bynordic Acquisition and Emerson Radio 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 Bynordic Acquisition with a short position of Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bynordic Acquisition and Emerson Radio.

Diversification Opportunities for Bynordic Acquisition and Emerson Radio

0.24

Correlation Coefficient

Bynordic Acquisition  Emerson Radio

Modest diversification

The 3 months correlation between Bynordic and Emerson is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bynordic Acquisition Corp and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio and Bynordic Acquisition 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 Bynordic Acquisition Corp are associated (or correlated) with Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Bynordic Acquisition i.e., Bynordic Acquisition and Emerson Radio go up and down completely randomly.

Pair Corralation between Bynordic Acquisition and Emerson Radio

Assuming the 90 days horizon Bynordic Acquisition is expected to generate 3.62 times less return on investment than Emerson Radio. But when comparing it to its historical volatility, Bynordic Acquisition Corp is 14.43 times less risky than Emerson Radio. It trades about 0.18 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Emerson Radio on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Emerson Radio or generate 6.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	59.68%
Values	Daily Returns

Bynordic Acquisition Corp  vs.  Emerson Radio

Bynordic Acquisition Corp

Risk-Adjusted Performance

Good

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

Emerson Radio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Radio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Emerson Radio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bynordic Acquisition and Emerson Radio

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

The idea behind Bynordic Acquisition Corp and Emerson Radio 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.