Correlation Between Emerson Radio and OCBCSP

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

By analyzing existing cross correlation between Emerson Radio and OCBCSP 1832 10 SEP 30, you can compare the effects of market volatilities on Emerson Radio and OCBCSP 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 Emerson Radio with a short position of OCBCSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and OCBCSP.

Diversification Opportunities for Emerson Radio and OCBCSP

-0.58

Correlation Coefficient

Emerson Radio  OCBCSP

Excellent diversification

The 3 months correlation between Emerson and OCBCSP is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio and OCBCSP 1832 10 SEP 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCBCSP 1832 10 and Emerson Radio 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 Emerson Radio are associated (or correlated) with OCBCSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCBCSP 1832 10 has no effect on the direction of Emerson Radio i.e., Emerson Radio and OCBCSP go up and down completely randomly.

Pair Corralation between Emerson Radio and OCBCSP

Considering the 90-day investment horizon Emerson Radio is expected to generate 0.82 times more return on investment than OCBCSP. However, Emerson Radio is 1.22 times less risky than OCBCSP. It trades about -0.16 of its potential returns per unit of risk. OCBCSP 1832 10 SEP 30 is currently generating about -0.73 per unit of risk. If you would invest  52.00  in Emerson Radio on October 7, 2024 and sell it today you would lose (9.00) from holding Emerson Radio or give up 17.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	7.32%
Values	Daily Returns

Emerson Radio  vs.  OCBCSP 1832 10 SEP 30

Emerson Radio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerson Radio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

OCBCSP 1832 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCBCSP 1832 10 SEP 30 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for OCBCSP 1832 10 SEP 30 investors.

Pair Trading with Emerson Radio and OCBCSP

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

The idea behind Emerson Radio and OCBCSP 1832 10 SEP 30 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.