Correlation Between EMX Royalty and BAIYU Holdings

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

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

Diversification Opportunities for EMX Royalty and BAIYU Holdings

-0.64

Correlation Coefficient

EMX Royalty  BAIYU Holdings

Excellent diversification

The 3 months correlation between EMX and BAIYU is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding EMX Royalty Corp and BAIYU Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAIYU Holdings and EMX Royalty 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 EMX Royalty Corp are associated (or correlated) with BAIYU Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAIYU Holdings has no effect on the direction of EMX Royalty i.e., EMX Royalty and BAIYU Holdings go up and down completely randomly.

Pair Corralation between EMX Royalty and BAIYU Holdings

Considering the 90-day investment horizon EMX Royalty Corp is expected to under-perform the BAIYU Holdings. But the stock apears to be less risky and, when comparing its historical volatility, EMX Royalty Corp is 1.22 times less risky than BAIYU Holdings. The stock trades about -0.03 of its potential returns per unit of risk. The BAIYU Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  117.00  in BAIYU Holdings on March 7, 2024 and sell it today you would earn a total of  1.00  from holding BAIYU Holdings or generate 0.85% return on investment over 90 days.

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

EMX Royalty Corp  vs.  BAIYU Holdings

EMX Royalty Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EMX Royalty Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, EMX Royalty may actually be approaching a critical reversion point that can send shares even higher in July 2024.

BAIYU Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAIYU Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with EMX Royalty and BAIYU Holdings

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

The idea behind EMX Royalty Corp and BAIYU Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.