Correlation Between Wang Lee and EMCOR

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

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

Diversification Opportunities for Wang Lee and EMCOR

-0.09

Correlation Coefficient

Wang Lee  EMCOR

Good diversification

The 3 months correlation between Wang and EMCOR is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wang Lee Group, and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Wang Lee 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 Wang Lee Group, are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Wang Lee i.e., Wang Lee and EMCOR go up and down completely randomly.

Pair Corralation between Wang Lee and EMCOR

Given the investment horizon of 90 days Wang Lee Group, is expected to generate 5.16 times more return on investment than EMCOR. However, Wang Lee is 5.16 times more volatile than EMCOR Group. It trades about 0.02 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.05 per unit of risk. If you would invest  186.00  in Wang Lee Group, on December 27, 2024 and sell it today you would lose (143.00) from holding Wang Lee Group, or give up 76.88% of portfolio value over 90 days.

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

Wang Lee Group,  vs.  EMCOR Group

Wang Lee Group,

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wang Lee Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Wang Lee unveiled solid returns over the last few months and may actually be approaching a breakup point.

EMCOR Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days EMCOR Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Wang Lee and EMCOR

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

The idea behind Wang Lee Group, and EMCOR Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.