Correlation Between Esfera Robotics and JPM Europe

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

By analyzing existing cross correlation between Esfera Robotics R and JPM Europe Small, you can compare the effects of market volatilities on Esfera Robotics and JPM Europe 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 Esfera Robotics with a short position of JPM Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esfera Robotics and JPM Europe.

Diversification Opportunities for Esfera Robotics and JPM Europe

0.06

Correlation Coefficient

Esfera Robotics  JPM Europe

Significant diversification

The 3 months correlation between Esfera and JPM is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Esfera Robotics R and JPM Europe Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM Europe Small and Esfera Robotics 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 Esfera Robotics R are associated (or correlated) with JPM Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM Europe Small has no effect on the direction of Esfera Robotics i.e., Esfera Robotics and JPM Europe go up and down completely randomly.

Pair Corralation between Esfera Robotics and JPM Europe

Assuming the 90 days trading horizon Esfera Robotics R is expected to under-perform the JPM Europe. In addition to that, Esfera Robotics is 1.62 times more volatile than JPM Europe Small. It trades about -0.08 of its total potential returns per unit of risk. JPM Europe Small is currently generating about 0.14 per unit of volatility. If you would invest  8,863  in JPM Europe Small on December 24, 2024 and sell it today you would earn a total of  605.00  from holding JPM Europe Small or generate 6.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Esfera Robotics R  vs.  JPM Europe Small

Esfera Robotics R

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esfera Robotics R has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Esfera Robotics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

JPM Europe Small

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JPM Europe Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, JPM Europe may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Esfera Robotics and JPM Europe

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

The idea behind Esfera Robotics R and JPM Europe Small 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.