Correlation Between EMBASSY OFFICE and Power Mech

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

By analyzing existing cross correlation between EMBASSY OFFICE PARKS and Power Mech Projects, you can compare the effects of market volatilities on EMBASSY OFFICE and Power Mech 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 EMBASSY OFFICE with a short position of Power Mech. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMBASSY OFFICE and Power Mech.

Diversification Opportunities for EMBASSY OFFICE and Power Mech

0.23

Correlation Coefficient

EMBASSY OFFICE  Power Mech

Modest diversification

The 3 months correlation between EMBASSY and Power is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding EMBASSY OFFICE PARKS and Power Mech Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Mech Projects and EMBASSY OFFICE 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 EMBASSY OFFICE PARKS are associated (or correlated) with Power Mech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Mech Projects has no effect on the direction of EMBASSY OFFICE i.e., EMBASSY OFFICE and Power Mech go up and down completely randomly.

Pair Corralation between EMBASSY OFFICE and Power Mech

Assuming the 90 days trading horizon EMBASSY OFFICE PARKS is expected to generate 0.27 times more return on investment than Power Mech. However, EMBASSY OFFICE PARKS is 3.68 times less risky than Power Mech. It trades about 0.03 of its potential returns per unit of risk. Power Mech Projects is currently generating about 0.0 per unit of risk. If you would invest  36,275  in EMBASSY OFFICE PARKS on December 28, 2024 and sell it today you would earn a total of  676.00  from holding EMBASSY OFFICE PARKS or generate 1.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

EMBASSY OFFICE PARKS  vs.  Power Mech Projects

EMBASSY OFFICE PARKS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EMBASSY OFFICE PARKS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, EMBASSY OFFICE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Power Mech Projects

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Mech Projects has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Power Mech is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EMBASSY OFFICE and Power Mech

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

The idea behind EMBASSY OFFICE PARKS and Power Mech Projects 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.