Correlation Between Richardson Electronics and EMagin

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

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

Diversification Opportunities for Richardson Electronics and EMagin

0.0

Correlation Coefficient

Richardson Electronics  EMagin

Pay attention - limited upside

The 3 months correlation between Richardson and EMagin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and EMagin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMagin and Richardson Electronics 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 Richardson Electronics are associated (or correlated) with EMagin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMagin has no effect on the direction of Richardson Electronics i.e., Richardson Electronics and EMagin go up and down completely randomly.

Pair Corralation between Richardson Electronics and EMagin

If you would invest (100.00) in EMagin on December 24, 2024 and sell it today you would earn a total of  100.00  from holding EMagin or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Richardson Electronics  vs.  EMagin

Richardson Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Richardson Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

EMagin

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMagin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EMagin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Richardson Electronics and EMagin

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

The idea behind Richardson Electronics and EMagin 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.