Correlation Between Emilia Devel and Gold Bond

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

By analyzing existing cross correlation between Emilia Devel and The Gold Bond, you can compare the effects of market volatilities on Emilia Devel and Gold Bond 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 Emilia Devel with a short position of Gold Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emilia Devel and Gold Bond.

Diversification Opportunities for Emilia Devel and Gold Bond

0.75

Correlation Coefficient

Emilia Devel  Gold Bond

Poor diversification

The 3 months correlation between Emilia and Gold is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Emilia Devel and The Gold Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bond and Emilia Devel 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 Emilia Devel are associated (or correlated) with Gold Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bond has no effect on the direction of Emilia Devel i.e., Emilia Devel and Gold Bond go up and down completely randomly.

Pair Corralation between Emilia Devel and Gold Bond

Assuming the 90 days trading horizon Emilia Devel is expected to generate 0.78 times more return on investment than Gold Bond. However, Emilia Devel is 1.28 times less risky than Gold Bond. It trades about 0.1 of its potential returns per unit of risk. The Gold Bond is currently generating about 0.06 per unit of risk. If you would invest  264,100  in Emilia Devel on December 29, 2024 and sell it today you would earn a total of  22,800  from holding Emilia Devel or generate 8.63% return on investment over 90 days.

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

Emilia Devel  vs.  The Gold Bond

Emilia Devel

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emilia Devel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Emilia Devel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gold Bond

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Gold Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bond may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Emilia Devel and Gold Bond

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

The idea behind Emilia Devel and The Gold Bond 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.