Correlation Between Embecta Corp and Nano X

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

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

Diversification Opportunities for Embecta Corp and Nano X

0.67

Correlation Coefficient

Embecta Corp  Nano X

Poor diversification

The 3 months correlation between Embecta and Nano is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Embecta Corp and Nano X Imaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano X Imaging and Embecta Corp 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 Embecta Corp are associated (or correlated) with Nano X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano X Imaging has no effect on the direction of Embecta Corp i.e., Embecta Corp and Nano X go up and down completely randomly.

Pair Corralation between Embecta Corp and Nano X

Given the investment horizon of 90 days Embecta Corp is expected to generate 0.83 times more return on investment than Nano X. However, Embecta Corp is 1.21 times less risky than Nano X. It trades about 0.12 of its potential returns per unit of risk. Nano X Imaging is currently generating about 0.06 per unit of risk. If you would invest  1,512  in Embecta Corp on September 23, 2024 and sell it today you would earn a total of  511.00  from holding Embecta Corp or generate 33.8% return on investment over 90 days.

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

Embecta Corp  vs.  Nano X Imaging

Embecta Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embecta Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental drivers, Embecta Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nano X Imaging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nano X Imaging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nano X showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Embecta Corp and Nano X

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

The idea behind Embecta Corp and Nano X Imaging 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.