Correlation Between Emerson Radio and Apple

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Can any of the company-specific risk be diversified away by investing in both Emerson Radio and Apple 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 Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerson Radio Corp and Apple Inc, you can compare the effects of market volatilities on Emerson Radio and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerson Radio and Apple.

Diversification Opportunities for Emerson Radio and Apple

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Emerson and Apple is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Emerson Radio Corp and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Corp are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Emerson Radio i.e., Emerson Radio and Apple go up and down completely randomly.

Pair Corralation between Emerson Radio and Apple

Considering the 90-day investment horizon Emerson Radio Corp is expected to generate 3.31 times more return on investment than Apple. However, Emerson Radio is 3.31 times more volatile than Apple Inc. It trades about 0.03 of its potential returns per unit of risk. Apple Inc is currently generating about 0.06 per unit of risk. If you would invest  66.00  in Emerson Radio Corp on May 14, 2022 and sell it today you would earn a total of  1.00  from holding Emerson Radio Corp or generate 1.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Emerson Radio Corp  vs.  Apple Inc

 Performance (%) 
       Timeline  
Emerson Radio Corp 
Emerson Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Emerson Radio Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Emerson Radio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Emerson Price Channel

Apple Inc 
Apple Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Apple revealed solid returns over the last few months and may actually be approaching a breakup point.

Apple Price Channel

Emerson Radio and Apple Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Emerson Radio and Apple

The main advantage of trading using opposite Emerson Radio and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerson Radio position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.
The idea behind Emerson Radio Corp and Apple Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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