Correlation Between Wave Systems and Ember Therapeutics

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Can any of the company-specific risk be diversified away by investing in both Wave Systems and Ember Therapeutics 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 Wave Systems and Ember Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wave Systems Corp and Ember Therapeutics, you can compare the effects of market volatilities on Wave Systems and Ember Therapeutics 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 Wave Systems with a short position of Ember Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wave Systems and Ember Therapeutics.

Diversification Opportunities for Wave Systems and Ember Therapeutics

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Wave Systems and Ember Therapeutics

If you would invest  0.00  in Ember Therapeutics on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Ember Therapeutics or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Wave Systems Corp  vs.  Ember Therapeutics

 Performance 
       Timeline  
Wave Systems Corp 

Risk-Adjusted Performance

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Over the last 90 days Wave Systems Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wave Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Ember Therapeutics 

Risk-Adjusted Performance

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Over the last 90 days Ember Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Ember Therapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Wave Systems and Ember Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wave Systems and Ember Therapeutics

The main advantage of trading using opposite Wave Systems and Ember Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wave Systems position performs unexpectedly, Ember Therapeutics 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 Ember Therapeutics will offset losses from the drop in Ember Therapeutics' long position.
The idea behind Wave Systems Corp and Ember Therapeutics 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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