Correlation Between La Rosa and Emerson Radio

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

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

Diversification Opportunities for La Rosa and Emerson Radio

-0.2

Correlation Coefficient

La Rosa  Emerson Radio

Good diversification

The 3 months correlation between LRHC and Emerson is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding La Rosa Holdings and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio and La Rosa 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 La Rosa Holdings are associated (or correlated) with Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of La Rosa i.e., La Rosa and Emerson Radio go up and down completely randomly.

Pair Corralation between La Rosa and Emerson Radio

Given the investment horizon of 90 days La Rosa Holdings is expected to under-perform the Emerson Radio. In addition to that, La Rosa is 1.79 times more volatile than Emerson Radio. It trades about -0.19 of its total potential returns per unit of risk. Emerson Radio is currently generating about 0.04 per unit of volatility. If you would invest  43.00  in Emerson Radio on December 25, 2024 and sell it today you would earn a total of  2.00  from holding Emerson Radio or generate 4.65% return on investment over 90 days.

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

La Rosa Holdings  vs.  Emerson Radio

La Rosa Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days La Rosa Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Emerson Radio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Radio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Emerson Radio may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with La Rosa and Emerson Radio

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

The idea behind La Rosa Holdings and Emerson Radio 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.