Correlation Between ReTo Eco and EMCOR

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

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

Diversification Opportunities for ReTo Eco and EMCOR

-0.82

Correlation Coefficient

ReTo Eco  EMCOR

Pay attention - limited upside

The 3 months correlation between ReTo and EMCOR is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and ReTo Eco 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 ReTo Eco Solutions are associated (or correlated) with EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of ReTo Eco i.e., ReTo Eco and EMCOR go up and down completely randomly.

Pair Corralation between ReTo Eco and EMCOR

Given the investment horizon of 90 days ReTo Eco Solutions is expected to generate 1.79 times more return on investment than EMCOR. However, ReTo Eco is 1.79 times more volatile than EMCOR Group. It trades about 0.1 of its potential returns per unit of risk. EMCOR Group is currently generating about -0.11 per unit of risk. If you would invest  92.00  in ReTo Eco Solutions on September 19, 2024 and sell it today you would earn a total of  6.00  from holding ReTo Eco Solutions or generate 6.52% return on investment over 90 days.

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

ReTo Eco Solutions  vs.  EMCOR Group

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

EMCOR Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ReTo Eco and EMCOR

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

The idea behind ReTo Eco Solutions and EMCOR Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..