Correlation Between Empire Global and AP Mller

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

By analyzing existing cross correlation between Empire Global Gaming and AP Mller , you can compare the effects of market volatilities on Empire Global and AP Mller 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 Empire Global with a short position of AP Mller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Global and AP Mller.

Diversification Opportunities for Empire Global and AP Mller

-0.37

Correlation Coefficient

Empire Global  AP Mller

Very good diversification

The 3 months correlation between Empire and AMKBF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Empire Global Gaming and AP Mller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AP Mller and Empire Global 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 Empire Global Gaming are associated (or correlated) with AP Mller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AP Mller has no effect on the direction of Empire Global i.e., Empire Global and AP Mller go up and down completely randomly.

Pair Corralation between Empire Global and AP Mller

Given the investment horizon of 90 days Empire Global Gaming is expected to generate 47.21 times more return on investment than AP Mller. However, Empire Global is 47.21 times more volatile than AP Mller . It trades about 0.1 of its potential returns per unit of risk. AP Mller is currently generating about 0.1 per unit of risk. If you would invest  0.03  in Empire Global Gaming on September 4, 2024 and sell it today you would lose (0.02) from holding Empire Global Gaming or give up 66.67% of portfolio value over 90 days.

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

Empire Global Gaming  vs.  AP Mller

Empire Global Gaming

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Empire Global Gaming are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Empire Global reported solid returns over the last few months and may actually be approaching a breakup point.

AP Mller

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AP Mller are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, AP Mller reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empire Global and AP Mller

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

The idea behind Empire Global Gaming and AP Mller 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.