Correlation Between Marine Products and Emerson Radio

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

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

Diversification Opportunities for Marine Products and Emerson Radio

-0.36

Correlation Coefficient

Marine Products  Emerson Radio

Very good diversification

The 3 months correlation between Marine and Emerson is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio and Marine Products 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 Marine Products 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 Marine Products i.e., Marine Products and Emerson Radio go up and down completely randomly.

Pair Corralation between Marine Products and Emerson Radio

Considering the 90-day investment horizon Marine Products is expected to under-perform the Emerson Radio. But the stock apears to be less risky and, when comparing its historical volatility, Marine Products is 1.29 times less risky than Emerson Radio. The stock trades about -0.01 of its potential returns per unit of risk. The Emerson Radio is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  53.00  in Emerson Radio on December 4, 2024 and sell it today you would lose (8.98) from holding Emerson Radio or give up 16.94% of portfolio value over 90 days.

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

Marine Products  vs.  Emerson Radio

Marine Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Emerson Radio

Risk-Adjusted Performance

Insignificant

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 Marine Products and Emerson Radio

The main advantage of trading using opposite Marine Products and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Products 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 Marine Products 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.