Correlation Between EM and REN

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

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

Diversification Opportunities for EM and REN

0.0

Correlation Coefficient

EM  REN

Pay attention - limited upside

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

Pair Corralation between EM and REN

If you would invest  1.02  in REN on April 23, 2025 and sell it today you would lose (0.01) from holding REN or give up 0.98% of portfolio value over 90 days.

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

EM  vs.  REN

EM

Risk-Adjusted Performance

Very Weak

Over the last 90 days EM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, EM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

REN

Risk-Adjusted Performance

Weak

Over the last 90 days REN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, REN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with EM and REN

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

The idea behind EM and REN 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.