Correlation Between EMPEROR ENT and PURETECH HEALTH

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

By analyzing existing cross correlation between EMPEROR ENT HOTEL and PURETECH HEALTH PLC, you can compare the effects of market volatilities on EMPEROR ENT and PURETECH HEALTH 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 EMPEROR ENT with a short position of PURETECH HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMPEROR ENT and PURETECH HEALTH.

Diversification Opportunities for EMPEROR ENT and PURETECH HEALTH

0.11

Correlation Coefficient

EMPEROR ENT  PURETECH HEALTH

Average diversification

The 3 months correlation between EMPEROR and PURETECH is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding EMPEROR ENT HOTEL and PURETECH HEALTH PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PURETECH HEALTH PLC and EMPEROR ENT 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 EMPEROR ENT HOTEL are associated (or correlated) with PURETECH HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PURETECH HEALTH PLC has no effect on the direction of EMPEROR ENT i.e., EMPEROR ENT and PURETECH HEALTH go up and down completely randomly.

Pair Corralation between EMPEROR ENT and PURETECH HEALTH

Assuming the 90 days trading horizon EMPEROR ENT HOTEL is expected to generate 0.43 times more return on investment than PURETECH HEALTH. However, EMPEROR ENT HOTEL is 2.3 times less risky than PURETECH HEALTH. It trades about -0.27 of its potential returns per unit of risk. PURETECH HEALTH PLC is currently generating about -0.27 per unit of risk. If you would invest  3.45  in EMPEROR ENT HOTEL on October 27, 2024 and sell it today you would lose (0.20) from holding EMPEROR ENT HOTEL or give up 5.8% of portfolio value over 90 days.

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

EMPEROR ENT HOTEL  vs.  PURETECH HEALTH PLC

EMPEROR ENT HOTEL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMPEROR ENT HOTEL 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 rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

PURETECH HEALTH PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PURETECH HEALTH PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with EMPEROR ENT and PURETECH HEALTH

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

The idea behind EMPEROR ENT HOTEL and PURETECH HEALTH PLC 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..