Correlation Between Nasdaq and EmbedWay TechCorp

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

Diversification Opportunities for Nasdaq and EmbedWay TechCorp

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Nasdaq and EmbedWay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and EmbedWay TechCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EmbedWay TechCorp and Nasdaq 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 Nasdaq Inc are associated (or correlated) with EmbedWay TechCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EmbedWay TechCorp has no effect on the direction of Nasdaq i.e., Nasdaq and EmbedWay TechCorp go up and down completely randomly.

Pair Corralation between Nasdaq and EmbedWay TechCorp

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the EmbedWay TechCorp. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 2.02 times less risky than EmbedWay TechCorp. The stock trades about -0.19 of its potential returns per unit of risk. The EmbedWay TechCorp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,450  in EmbedWay TechCorp on September 27, 2024 and sell it today you would lose (1.00) from holding EmbedWay TechCorp or give up 0.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Nasdaq Inc  vs.  EmbedWay TechCorp

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.
EmbedWay TechCorp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in EmbedWay TechCorp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EmbedWay TechCorp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nasdaq and EmbedWay TechCorp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and EmbedWay TechCorp

The main advantage of trading using opposite Nasdaq and EmbedWay TechCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, EmbedWay TechCorp 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 EmbedWay TechCorp will offset losses from the drop in EmbedWay TechCorp's long position.
The idea behind Nasdaq Inc and EmbedWay TechCorp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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