Correlation Between EMCORE and ClearOne

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

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

Diversification Opportunities for EMCORE and ClearOne

-0.52

Correlation Coefficient

EMCORE  ClearOne

Excellent diversification

The 3 months correlation between EMCORE and ClearOne is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding EMCORE and ClearOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearOne and EMCORE 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 EMCORE are associated (or correlated) with ClearOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearOne has no effect on the direction of EMCORE i.e., EMCORE and ClearOne go up and down completely randomly.

Pair Corralation between EMCORE and ClearOne

Given the investment horizon of 90 days EMCORE is expected to generate 284.3 times less return on investment than ClearOne. But when comparing it to its historical volatility, EMCORE is 5.33 times less risky than ClearOne. It trades about 0.0 of its potential returns per unit of risk. ClearOne is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  50.00  in ClearOne on September 22, 2024 and sell it today you would earn a total of  11.00  from holding ClearOne or generate 22.0% return on investment over 90 days.

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

EMCORE  vs.  ClearOne

EMCORE

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCORE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, EMCORE reported solid returns over the last few months and may actually be approaching a breakup point.

ClearOne

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ClearOne are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, ClearOne may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EMCORE and ClearOne

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

The idea behind EMCORE and ClearOne 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.