Correlation Between Embecta Corp and Safeplus International

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

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

Diversification Opportunities for Embecta Corp and Safeplus International

-0.33

Correlation Coefficient

Embecta Corp  Safeplus International

Very good diversification

The 3 months correlation between Embecta and Safeplus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Embecta Corp and Safeplus International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safeplus International and Embecta Corp 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 Embecta Corp are associated (or correlated) with Safeplus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safeplus International has no effect on the direction of Embecta Corp i.e., Embecta Corp and Safeplus International go up and down completely randomly.

Pair Corralation between Embecta Corp and Safeplus International

Given the investment horizon of 90 days Embecta Corp is expected to generate 3.08 times more return on investment than Safeplus International. However, Embecta Corp is 3.08 times more volatile than Safeplus International Holdings. It trades about 0.1 of its potential returns per unit of risk. Safeplus International Holdings is currently generating about 0.02 per unit of risk. If you would invest  1,646  in Embecta Corp on September 3, 2024 and sell it today you would earn a total of  437.00  from holding Embecta Corp or generate 26.55% return on investment over 90 days.

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

Embecta Corp  vs.  Safeplus International Holding

Embecta Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embecta Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Embecta Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Safeplus International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Safeplus International Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Safeplus International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Embecta Corp and Safeplus International

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

The idea behind Embecta Corp and Safeplus International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.