Correlation Between Episil Precision and GlobalWafers

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

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

Diversification Opportunities for Episil Precision and GlobalWafers

0.36

Correlation Coefficient

Episil Precision  GlobalWafers

Weak diversification

The 3 months correlation between Episil and GlobalWafers is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Episil Precision and GlobalWafers Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalWafers 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 GlobalWafers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalWafers has no effect on the direction of Episil Precision i.e., Episil Precision and GlobalWafers go up and down completely randomly.

Pair Corralation between Episil Precision and GlobalWafers

Assuming the 90 days trading horizon Episil Precision is expected to under-perform the GlobalWafers. But the stock apears to be less risky and, when comparing its historical volatility, Episil Precision is 1.02 times less risky than GlobalWafers. The stock trades about -0.18 of its potential returns per unit of risk. The GlobalWafers Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  37,978  in GlobalWafers Co on December 25, 2024 and sell it today you would lose (978.00) from holding GlobalWafers Co or give up 2.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.21%
Values	Daily Returns

Episil Precision  vs.  GlobalWafers Co

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 abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

GlobalWafers

Risk-Adjusted Performance

Very Weak

Over the last 90 days GlobalWafers Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GlobalWafers 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 GlobalWafers

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

The idea behind Episil Precision and GlobalWafers Co 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.