Correlation Between Origin Emerging and Lazard Emerging

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

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

Diversification Opportunities for Origin Emerging and Lazard Emerging

0.92

Correlation Coefficient

Origin Emerging  Lazard Emerging

Almost no diversification

The 3 months correlation between Origin and Lazard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Origin Emerging Markets and Lazard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Emerging Markets and Origin Emerging 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 Origin Emerging Markets are associated (or correlated) with Lazard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Emerging Markets has no effect on the direction of Origin Emerging i.e., Origin Emerging and Lazard Emerging go up and down completely randomly.

Pair Corralation between Origin Emerging and Lazard Emerging

Assuming the 90 days horizon Origin Emerging Markets is expected to generate 0.96 times more return on investment than Lazard Emerging. However, Origin Emerging Markets is 1.04 times less risky than Lazard Emerging. It trades about 0.18 of its potential returns per unit of risk. Lazard Emerging Markets is currently generating about 0.14 per unit of risk. If you would invest  1,022  in Origin Emerging Markets on February 5, 2024 and sell it today you would earn a total of  38.00  from holding Origin Emerging Markets or generate 3.72% return on investment over 90 days.

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

Origin Emerging Markets  vs.  Lazard Emerging Markets

Origin Emerging Markets

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Origin Emerging Markets are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Origin Emerging may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Lazard Emerging Markets

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Emerging Markets are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lazard Emerging may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Origin Emerging and Lazard Emerging

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

The idea behind Origin Emerging Markets and Lazard Emerging Markets 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 Global Correlations module to find global opportunities by holding instruments from different markets.