Correlation Between Renesas Electronics and EMCOR

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

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

Diversification Opportunities for Renesas Electronics and EMCOR

0.15

Correlation Coefficient

Renesas Electronics  EMCOR

Average diversification

The 3 months correlation between Renesas and EMCOR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Renesas Electronics and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics i.e., Renesas Electronics and EMCOR go up and down completely randomly.

Pair Corralation between Renesas Electronics and EMCOR

Assuming the 90 days horizon Renesas Electronics is expected to generate 4.22 times less return on investment than EMCOR. In addition to that, Renesas Electronics is 1.86 times more volatile than EMCOR Group. It trades about 0.04 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.32 per unit of volatility. If you would invest  33,575  in EMCOR Group on April 24, 2025 and sell it today you would earn a total of  13,975  from holding EMCOR Group or generate 41.62% return on investment over 90 days.

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

Renesas Electronics  vs.  EMCOR Group

Renesas Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Renesas Electronics are ranked lower than 3 (%) 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.

EMCOR Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 24 (%) 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.

Pair Trading with Renesas Electronics and EMCOR

The main advantage of trading using opposite Renesas Electronics and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renesas Electronics 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 Renesas Electronics 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.