Correlation Between EGain and Semrush Holdings

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

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

Diversification Opportunities for EGain and Semrush Holdings

-0.28

Correlation Coefficient

EGain  Semrush Holdings

Very good diversification

The 3 months correlation between EGain and Semrush is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding eGain and Semrush Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semrush Holdings and EGain 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 eGain are associated (or correlated) with Semrush Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semrush Holdings has no effect on the direction of EGain i.e., EGain and Semrush Holdings go up and down completely randomly.

Pair Corralation between EGain and Semrush Holdings

Given the investment horizon of 90 days eGain is expected to generate 1.38 times more return on investment than Semrush Holdings. However, EGain is 1.38 times more volatile than Semrush Holdings. It trades about 0.13 of its potential returns per unit of risk. Semrush Holdings is currently generating about 0.1 per unit of risk. If you would invest  488.00  in eGain on October 22, 2024 and sell it today you would earn a total of  166.00  from holding eGain or generate 34.02% return on investment over 90 days.

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

eGain  vs.  Semrush Holdings

eGain

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in eGain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, EGain displayed solid returns over the last few months and may actually be approaching a breakup point.

Semrush Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semrush Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady primary indicators, Semrush Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EGain and Semrush Holdings

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

The idea behind eGain and Semrush Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.