Correlation Between EMCOR and Playstudios

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

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

Diversification Opportunities for EMCOR and Playstudios

0.6

Correlation Coefficient

EMCOR  Playstudios

Poor diversification

The 3 months correlation between EMCOR and Playstudios is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Playstudios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playstudios 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 Playstudios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playstudios has no effect on the direction of EMCOR i.e., EMCOR and Playstudios go up and down completely randomly.

Pair Corralation between EMCOR and Playstudios

Considering the 90-day investment horizon EMCOR Group is expected to generate 0.56 times more return on investment than Playstudios. However, EMCOR Group is 1.8 times less risky than Playstudios. It trades about 0.13 of its potential returns per unit of risk. Playstudios is currently generating about -0.02 per unit of risk. If you would invest  14,732  in EMCOR Group on September 23, 2024 and sell it today you would earn a total of  31,850  from holding EMCOR Group or generate 216.2% return on investment over 90 days.

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

EMCOR Group  vs.  Playstudios

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 unsteady primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Playstudios

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EMCOR and Playstudios

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

The idea behind EMCOR Group and Playstudios 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.

Check out your portfolio center.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.