Correlation Between EMemory Technology and FineTek

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Can any of the company-specific risk be diversified away by investing in both EMemory Technology and FineTek 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 EMemory Technology and FineTek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eMemory Technology and FineTek Co, you can compare the effects of market volatilities on EMemory Technology and FineTek 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 EMemory Technology with a short position of FineTek. Check out your portfolio center. Please also check ongoing floating volatility patterns of EMemory Technology and FineTek.

Diversification Opportunities for EMemory Technology and FineTek

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between EMemory and FineTek is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding eMemory Technology and FineTek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FineTek and EMemory Technology 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 eMemory Technology are associated (or correlated) with FineTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FineTek has no effect on the direction of EMemory Technology i.e., EMemory Technology and FineTek go up and down completely randomly.

Pair Corralation between EMemory Technology and FineTek

Assuming the 90 days trading horizon eMemory Technology is expected to generate 1.06 times more return on investment than FineTek. However, EMemory Technology is 1.06 times more volatile than FineTek Co. It trades about 0.15 of its potential returns per unit of risk. FineTek Co is currently generating about 0.02 per unit of risk. If you would invest  236,000  in eMemory Technology on September 13, 2024 and sell it today you would earn a total of  77,500  from holding eMemory Technology or generate 32.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

eMemory Technology  vs.  FineTek Co

 Performance 
       Timeline  
eMemory Technology 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in eMemory Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EMemory Technology showed solid returns over the last few months and may actually be approaching a breakup point.
FineTek 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in FineTek Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FineTek is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

EMemory Technology and FineTek Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EMemory Technology and FineTek

The main advantage of trading using opposite EMemory Technology and FineTek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EMemory Technology position performs unexpectedly, FineTek 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 FineTek will offset losses from the drop in FineTek's long position.
The idea behind eMemory Technology and FineTek Co 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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