Correlation Between Emira Property and Octodec

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

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

Diversification Opportunities for Emira Property and Octodec

0.29

Correlation Coefficient

Emira Property  Octodec

Modest diversification

The 3 months correlation between Emira and Octodec is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Emira Property and Octodec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octodec and Emira Property 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 Emira Property are associated (or correlated) with Octodec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octodec has no effect on the direction of Emira Property i.e., Emira Property and Octodec go up and down completely randomly.

Pair Corralation between Emira Property and Octodec

Assuming the 90 days trading horizon Emira Property is expected to under-perform the Octodec. But the stock apears to be less risky and, when comparing its historical volatility, Emira Property is 1.06 times less risky than Octodec. The stock trades about -0.25 of its potential returns per unit of risk. The Octodec is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  121,000  in Octodec on September 25, 2024 and sell it today you would lose (6,000) from holding Octodec or give up 4.96% of portfolio value over 90 days.

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

Emira Property  vs.  Octodec

Emira Property

Risk-Adjusted Performance

0 of 100

Very Weak

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

Octodec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Emira Property and Octodec

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

The idea behind Emira Property and Octodec 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.