Correlation Between Apogee Enterprises and EMCORE

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

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

Diversification Opportunities for Apogee Enterprises and EMCORE

-0.73

Correlation Coefficient

Apogee Enterprises  EMCORE

Pay attention - limited upside

The 3 months correlation between Apogee and EMCORE is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and EMCORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCORE and Apogee Enterprises 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 Apogee Enterprises are associated (or correlated) with EMCORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCORE has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and EMCORE go up and down completely randomly.

Pair Corralation between Apogee Enterprises and EMCORE

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 0.26 times more return on investment than EMCORE. However, Apogee Enterprises is 3.83 times less risky than EMCORE. It trades about 0.18 of its potential returns per unit of risk. EMCORE is currently generating about -0.01 per unit of risk. If you would invest  4,358  in Apogee Enterprises on January 30, 2024 and sell it today you would earn a total of  1,847  from holding Apogee Enterprises or generate 42.38% return on investment over 90 days.

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

Apogee Enterprises  vs.  EMCORE

Apogee Enterprises

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

EMCORE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMCORE has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Apogee Enterprises and EMCORE

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

The idea behind Apogee Enterprises and EMCORE 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.