Correlation Between Dianthus Therapeutics and EMCOR

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

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

Diversification Opportunities for Dianthus Therapeutics and EMCOR

-0.45

Correlation Coefficient

Dianthus Therapeutics  EMCOR

Very good diversification

The 3 months correlation between Dianthus and EMCOR is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dianthus Therapeutics and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Dianthus Therapeutics 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 Dianthus Therapeutics are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Dianthus Therapeutics i.e., Dianthus Therapeutics and EMCOR go up and down completely randomly.

Pair Corralation between Dianthus Therapeutics and EMCOR

Given the investment horizon of 90 days Dianthus Therapeutics is expected to under-perform the EMCOR. In addition to that, Dianthus Therapeutics is 1.67 times more volatile than EMCOR Group. It trades about -0.26 of its total potential returns per unit of risk. EMCOR Group is currently generating about -0.34 per unit of volatility. If you would invest  50,959  in EMCOR Group on October 4, 2024 and sell it today you would lose (5,569) from holding EMCOR Group or give up 10.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Dianthus Therapeutics  vs.  EMCOR Group

Dianthus Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dianthus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

EMCOR Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, EMCOR is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dianthus Therapeutics and EMCOR

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

The idea behind Dianthus Therapeutics and EMCOR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.