Correlation Between EMCOR and Auddia

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

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

Diversification Opportunities for EMCOR and Auddia

-0.28

Correlation Coefficient

EMCOR  Auddia

Very good diversification

The 3 months correlation between EMCOR and Auddia is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia Inc and EMCOR 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 EMCOR Group are associated (or correlated) with Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of EMCOR i.e., EMCOR and Auddia go up and down completely randomly.

Pair Corralation between EMCOR and Auddia

Considering the 90-day investment horizon EMCOR is expected to generate 10.29 times less return on investment than Auddia. But when comparing it to its historical volatility, EMCOR Group is 9.98 times less risky than Auddia. It trades about 0.07 of its potential returns per unit of risk. Auddia Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.74  in Auddia Inc on October 25, 2024 and sell it today you would lose (0.15) from holding Auddia Inc or give up 5.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.05%
Values	Daily Returns

EMCOR Group  vs.  Auddia Inc

EMCOR Group

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Auddia Inc

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auddia Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Auddia showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMCOR and Auddia

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

The idea behind EMCOR Group and Auddia 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.