Correlation Between EMCOR and ACS Actividades

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

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

Diversification Opportunities for EMCOR and ACS Actividades

0.72

Correlation Coefficient

EMCOR  ACS Actividades

Poor diversification

The 3 months correlation between EMCOR and ACS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and ACS Actividades de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACS Actividades de and EMCOR 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 EMCOR Group are associated (or correlated) with ACS Actividades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACS Actividades de has no effect on the direction of EMCOR i.e., EMCOR and ACS Actividades go up and down completely randomly.

Pair Corralation between EMCOR and ACS Actividades

Considering the 90-day investment horizon EMCOR Group is expected to generate 2.94 times more return on investment than ACS Actividades. However, EMCOR is 2.94 times more volatile than ACS Actividades de. It trades about 0.32 of its potential returns per unit of risk. ACS Actividades de is currently generating about 0.18 per unit of risk. If you would invest  35,843  in EMCOR Group on August 31, 2024 and sell it today you would earn a total of  14,952  from holding EMCOR Group or generate 41.72% return on investment over 90 days.

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

EMCOR Group  vs.  ACS Actividades de

EMCOR Group

Risk-Adjusted Performance

25 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

ACS Actividades de

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACS Actividades de are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, ACS Actividades may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with EMCOR and ACS Actividades

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

The idea behind EMCOR Group and ACS Actividades de 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..