Correlation Between FocalTech Systems and Episil Holding

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

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

Diversification Opportunities for FocalTech Systems and Episil Holding

0.44

Correlation Coefficient

FocalTech Systems  Episil Holding

Very weak diversification

The 3 months correlation between FocalTech and Episil is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding FocalTech Systems Co and Episil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episil Holding and FocalTech Systems 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 FocalTech Systems Co 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 FocalTech Systems i.e., FocalTech Systems and Episil Holding go up and down completely randomly.

Pair Corralation between FocalTech Systems and Episil Holding

Assuming the 90 days trading horizon FocalTech Systems Co is expected to under-perform the Episil Holding. But the stock apears to be less risky and, when comparing its historical volatility, FocalTech Systems Co is 1.32 times less risky than Episil Holding. The stock trades about -0.13 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  5,040  in Episil Holding on December 24, 2024 and sell it today you would lose (315.00) from holding Episil Holding or give up 6.25% of portfolio value over 90 days.

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

FocalTech Systems Co  vs.  Episil Holding

FocalTech Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days FocalTech Systems Co 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.

Episil Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Episil Holding has generated negative risk-adjusted returns adding no value to investors with long positions. 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 FocalTech Systems and Episil Holding

The main advantage of trading using opposite FocalTech Systems and Episil Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FocalTech Systems 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 FocalTech Systems Co 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.

Check out your portfolio center.

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.