Correlation Between Emerge Commerce and Phonex

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

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

Diversification Opportunities for Emerge Commerce and Phonex

-0.33

Correlation Coefficient

Emerge Commerce  Phonex

Very good diversification

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

Pair Corralation between Emerge Commerce and Phonex

Assuming the 90 days horizon Emerge Commerce is expected to generate 4.67 times more return on investment than Phonex. However, Emerge Commerce is 4.67 times more volatile than Phonex Inc. It trades about 0.1 of its potential returns per unit of risk. Phonex Inc is currently generating about 0.08 per unit of risk. If you would invest  2.51  in Emerge Commerce on December 29, 2024 and sell it today you would earn a total of  1.49  from holding Emerge Commerce or generate 59.36% return on investment over 90 days.

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

Emerge Commerce  vs.  Phonex Inc

Emerge Commerce

Risk-Adjusted Performance

OK

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

Phonex Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Phonex Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Phonex demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emerge Commerce and Phonex

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

The idea behind Emerge Commerce and Phonex Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.