Correlation Between Empire Global and COSCO SHIPPING

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

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

Diversification Opportunities for Empire Global and COSCO SHIPPING

-0.57

Correlation Coefficient

Empire Global  COSCO SHIPPING

Excellent diversification

The 3 months correlation between Empire and COSCO is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Empire Global Gaming and COSCO SHIPPING Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSCO SHIPPING Devel and Empire 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 Empire Global Gaming are associated (or correlated) with COSCO SHIPPING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSCO SHIPPING Devel has no effect on the direction of Empire Global i.e., Empire Global and COSCO SHIPPING go up and down completely randomly.

Pair Corralation between Empire Global and COSCO SHIPPING

Given the investment horizon of 90 days Empire Global Gaming is expected to under-perform the COSCO SHIPPING. In addition to that, Empire Global is 10.48 times more volatile than COSCO SHIPPING Development. It trades about -0.09 of its total potential returns per unit of risk. COSCO SHIPPING Development is currently generating about -0.02 per unit of volatility. If you would invest  539.00  in COSCO SHIPPING Development on September 13, 2024 and sell it today you would lose (20.00) from holding COSCO SHIPPING Development or give up 3.71% of portfolio value over 90 days.

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

Empire Global Gaming  vs.  COSCO SHIPPING Development

Empire Global Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empire Global Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COSCO SHIPPING Devel

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSCO SHIPPING Development are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, COSCO SHIPPING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Empire Global and COSCO SHIPPING

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

The idea behind Empire Global Gaming and COSCO SHIPPING Development 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.