Correlation Between EMCORE and QuickLogic

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

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

Diversification Opportunities for EMCORE and QuickLogic

0.22

Correlation Coefficient

EMCORE  QuickLogic

Modest diversification

The 3 months correlation between EMCORE and QuickLogic is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding EMCORE and QuickLogic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QuickLogic 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 QuickLogic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QuickLogic has no effect on the direction of EMCORE i.e., EMCORE and QuickLogic go up and down completely randomly.

Pair Corralation between EMCORE and QuickLogic

Given the investment horizon of 90 days EMCORE is expected to generate 3.46 times more return on investment than QuickLogic. However, EMCORE is 3.46 times more volatile than QuickLogic. It trades about 0.19 of its potential returns per unit of risk. QuickLogic is currently generating about 0.05 per unit of risk. If you would invest  98.00  in EMCORE on September 5, 2024 and sell it today you would earn a total of  198.00  from holding EMCORE or generate 202.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

EMCORE  vs.  QuickLogic

EMCORE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCORE are ranked lower than 15 (%) 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.

QuickLogic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in QuickLogic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal forward indicators, QuickLogic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EMCORE and QuickLogic

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

The idea behind EMCORE and QuickLogic 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.