Correlation Between Episil Precision and Holy Stone

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

By analyzing existing cross correlation between Episil Precision and Holy Stone Enterprise, you can compare the effects of market volatilities on Episil Precision and Holy Stone 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 Episil Precision with a short position of Holy Stone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Episil Precision and Holy Stone.

Diversification Opportunities for Episil Precision and Holy Stone

0.79

Correlation Coefficient

Episil Precision  Holy Stone

Poor diversification

The 3 months correlation between Episil and Holy is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Episil Precision and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone Enterprise and Episil Precision 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 Episil Precision are associated (or correlated) with Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of Episil Precision i.e., Episil Precision and Holy Stone go up and down completely randomly.

Pair Corralation between Episil Precision and Holy Stone

Assuming the 90 days trading horizon Episil Precision is expected to under-perform the Holy Stone. In addition to that, Episil Precision is 2.43 times more volatile than Holy Stone Enterprise. It trades about -0.14 of its total potential returns per unit of risk. Holy Stone Enterprise is currently generating about -0.06 per unit of volatility. If you would invest  9,310  in Holy Stone Enterprise on October 10, 2024 and sell it today you would lose (740.00) from holding Holy Stone Enterprise or give up 7.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Episil Precision  vs.  Holy Stone Enterprise

Episil Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Episil Precision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Holy Stone Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holy Stone Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Holy Stone is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Episil Precision and Holy Stone

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

The idea behind Episil Precision and Holy Stone Enterprise 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.