Correlation Between EMCORE and DSP

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

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

Diversification Opportunities for EMCORE and DSP

0.0

Correlation Coefficient

EMCORE  DSP

Pay attention - limited upside

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

Pair Corralation between EMCORE and DSP

If you would invest (100.00) in DSP Group on January 26, 2024 and sell it today you would earn a total of  100.00  from holding DSP Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EMCORE  vs.  DSP Group

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.

DSP Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSP Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DSP is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EMCORE and DSP

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

The idea behind EMCORE and DSP 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.