Correlation Between EMCOR and Hunter Creek

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

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

Diversification Opportunities for EMCOR and Hunter Creek

0.0

Correlation Coefficient

EMCOR  Hunter Creek

Pay attention - limited upside

The 3 months correlation between EMCOR and Hunter is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Hunter Creek Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Creek Mining 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 Hunter Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Creek Mining has no effect on the direction of EMCOR i.e., EMCOR and Hunter Creek go up and down completely randomly.

Pair Corralation between EMCOR and Hunter Creek

Considering the 90-day investment horizon EMCOR is expected to generate 2.4 times less return on investment than Hunter Creek. But when comparing it to its historical volatility, EMCOR Group is 9.9 times less risky than Hunter Creek. It trades about 0.14 of its potential returns per unit of risk. Hunter Creek Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Hunter Creek Mining on October 10, 2024 and sell it today you would lose (10.20) from holding Hunter Creek Mining or give up 51.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

EMCOR Group  vs.  Hunter Creek Mining

EMCOR Group

Risk-Adjusted Performance

5 of 100

Insignificant

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.

Hunter Creek Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hunter Creek Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Hunter Creek is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EMCOR and Hunter Creek

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

The idea behind EMCOR Group and Hunter Creek Mining 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.