Correlation Between Emergent Health and Now Corp

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

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

Diversification Opportunities for Emergent Health and Now Corp

0.06

Correlation Coefficient

Emergent Health  Now Corp

Significant diversification

The 3 months correlation between Emergent and Now is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Emergent Health Corp and Now Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Corp and Emergent Health 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 Emergent Health Corp are associated (or correlated) with Now Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Corp has no effect on the direction of Emergent Health i.e., Emergent Health and Now Corp go up and down completely randomly.

Pair Corralation between Emergent Health and Now Corp

Given the investment horizon of 90 days Emergent Health Corp is expected to under-perform the Now Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Emergent Health Corp is 22.38 times less risky than Now Corp. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Now Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Now Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Now Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Emergent Health Corp  vs.  Now Corp

Emergent Health Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emergent Health Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Now Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Now Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Now Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Emergent Health and Now Corp

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

The idea behind Emergent Health Corp and Now Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.