Correlation Between EMCOR and Caspian Services

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

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

Diversification Opportunities for EMCOR and Caspian Services

0.55

Correlation Coefficient

EMCOR  Caspian Services

Very weak diversification

The 3 months correlation between EMCOR and Caspian is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Caspian Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Services 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 Caspian Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Services has no effect on the direction of EMCOR i.e., EMCOR and Caspian Services go up and down completely randomly.

Pair Corralation between EMCOR and Caspian Services

If you would invest  0.40  in Caspian Services on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Caspian Services or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

EMCOR Group  vs.  Caspian Services

EMCOR Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Caspian Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caspian Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Caspian Services showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMCOR and Caspian Services

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

The idea behind EMCOR Group and Caspian Services 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.