Correlation Between Italian Thai and EMC Public

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

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

Diversification Opportunities for Italian Thai and EMC Public

0.45

Correlation Coefficient

Italian Thai  EMC Public

Very weak diversification

The 3 months correlation between Italian and EMC is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and EMC Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMC Public and Italian Thai 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 Italian Thai Development Public are associated (or correlated) with EMC Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMC Public has no effect on the direction of Italian Thai i.e., Italian Thai and EMC Public go up and down completely randomly.

Pair Corralation between Italian Thai and EMC Public

Assuming the 90 days trading horizon Italian Thai Development Public is expected to under-perform the EMC Public. But the stock apears to be less risky and, when comparing its historical volatility, Italian Thai Development Public is 2.94 times less risky than EMC Public. The stock trades about -0.3 of its potential returns per unit of risk. The EMC Public is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  8.00  in EMC Public on December 26, 2024 and sell it today you would lose (1.00) from holding EMC Public or give up 12.5% of portfolio value over 90 days.

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

Italian Thai Development Publi  vs.  EMC Public

Italian Thai Develop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Italian Thai Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

EMC Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMC Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, EMC Public 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 Italian Thai and EMC Public

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

The idea behind Italian Thai Development Public and EMC Public 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.