Correlation Between EMCOR and Renesas Electronics

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

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

Diversification Opportunities for EMCOR and Renesas Electronics

0.43

Correlation Coefficient

EMCOR  Renesas Electronics

Very weak diversification

The 3 months correlation between EMCOR and Renesas is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding EMCOR Group and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics and EMCOR 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 EMCOR Group are associated (or correlated) with Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of EMCOR i.e., EMCOR and Renesas Electronics go up and down completely randomly.

Pair Corralation between EMCOR and Renesas Electronics

Assuming the 90 days horizon EMCOR Group is expected to generate 0.54 times more return on investment than Renesas Electronics. However, EMCOR Group is 1.86 times less risky than Renesas Electronics. It trades about 0.32 of its potential returns per unit of risk. Renesas Electronics is currently generating about 0.05 per unit of risk. If you would invest  33,575  in EMCOR Group on April 24, 2025 and sell it today you would earn a total of  14,145  from holding EMCOR Group or generate 42.13% return on investment over 90 days.

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

EMCOR Group  vs.  Renesas Electronics

EMCOR Group

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EMCOR reported solid returns over the last few months and may actually be approaching a breakup point.

Renesas Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Renesas Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Renesas Electronics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with EMCOR and Renesas Electronics

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

The idea behind EMCOR Group and Renesas Electronics 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.