Correlation Between Episil Precision and Episil Holding

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

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

Diversification Opportunities for Episil Precision and Episil Holding

0.58

Correlation Coefficient

Episil Precision  Episil Holding

Very weak diversification

The 3 months correlation between Episil and Episil is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Episil Precision and Episil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episil Holding 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 Episil Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episil Holding has no effect on the direction of Episil Precision i.e., Episil Precision and Episil Holding go up and down completely randomly.

Pair Corralation between Episil Precision and Episil Holding

Assuming the 90 days trading horizon Episil Precision is expected to under-perform the Episil Holding. But the stock apears to be less risky and, when comparing its historical volatility, Episil Precision is 1.05 times less risky than Episil Holding. The stock trades about -0.05 of its potential returns per unit of risk. The Episil Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,590  in Episil Holding on December 23, 2024 and sell it today you would earn a total of  135.00  from holding Episil Holding or generate 2.94% return on investment over 90 days.

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

Episil Precision  vs.  Episil Holding

Episil Precision

Risk-Adjusted Performance

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Episil Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Episil Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Episil Holding 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 Episil Holding

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

The idea behind Episil Precision and Episil Holding 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.