Correlation Between Easywell Biomedicals and Universal Vision

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

By analyzing existing cross correlation between Easywell Biomedicals and Universal Vision Biotechnology, you can compare the effects of market volatilities on Easywell Biomedicals and Universal Vision 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 Easywell Biomedicals with a short position of Universal Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easywell Biomedicals and Universal Vision.

Diversification Opportunities for Easywell Biomedicals and Universal Vision

0.32

Correlation Coefficient

Easywell Biomedicals  Universal Vision

Weak diversification

The 3 months correlation between Easywell and Universal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Easywell Biomedicals and Universal Vision Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Vision Bio and Easywell Biomedicals 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 Easywell Biomedicals are associated (or correlated) with Universal Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Vision Bio has no effect on the direction of Easywell Biomedicals i.e., Easywell Biomedicals and Universal Vision go up and down completely randomly.

Pair Corralation between Easywell Biomedicals and Universal Vision

Assuming the 90 days trading horizon Easywell Biomedicals is expected to generate 2.59 times more return on investment than Universal Vision. However, Easywell Biomedicals is 2.59 times more volatile than Universal Vision Biotechnology. It trades about 0.04 of its potential returns per unit of risk. Universal Vision Biotechnology is currently generating about 0.08 per unit of risk. If you would invest  6,700  in Easywell Biomedicals on December 4, 2024 and sell it today you would earn a total of  260.00  from holding Easywell Biomedicals or generate 3.88% return on investment over 90 days.

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

Easywell Biomedicals  vs.  Universal Vision Biotechnology

Easywell Biomedicals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Easywell Biomedicals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Easywell Biomedicals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Universal Vision Bio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Vision Biotechnology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Universal Vision may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Easywell Biomedicals and Universal Vision

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

The idea behind Easywell Biomedicals and Universal Vision Biotechnology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.