Correlation Between Emkay Global and Central Bank

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

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

Diversification Opportunities for Emkay Global and Central Bank

0.47

Correlation Coefficient

Emkay Global  Central Bank

Very weak diversification

The 3 months correlation between Emkay and Central is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Emkay Global Financial and Central Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Bank and Emkay Global 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 Emkay Global Financial are associated (or correlated) with Central Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Bank has no effect on the direction of Emkay Global i.e., Emkay Global and Central Bank go up and down completely randomly.

Pair Corralation between Emkay Global and Central Bank

Assuming the 90 days trading horizon Emkay Global Financial is expected to generate 0.68 times more return on investment than Central Bank. However, Emkay Global Financial is 1.48 times less risky than Central Bank. It trades about 0.07 of its potential returns per unit of risk. Central Bank of is currently generating about 0.02 per unit of risk. If you would invest  26,160  in Emkay Global Financial on October 24, 2024 and sell it today you would earn a total of  2,375  from holding Emkay Global Financial or generate 9.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Emkay Global Financial  vs.  Central Bank of

Emkay Global Financial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emkay Global Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Emkay Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Central Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Bank of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Central Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Emkay Global and Central Bank

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

The idea behind Emkay Global Financial and Central Bank of 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.