Correlation Between Episil Holding and Episil Precision

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

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

Diversification Opportunities for Episil Holding and Episil Precision

0.91

Correlation Coefficient

Episil Holding  Episil Precision

Almost no diversification

The 3 months correlation between Episil and Episil is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Episil Holding and Episil Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episil Precision and Episil Holding 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 Holding are associated (or correlated) with Episil Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episil Precision has no effect on the direction of Episil Holding i.e., Episil Holding and Episil Precision go up and down completely randomly.

Pair Corralation between Episil Holding and Episil Precision

Assuming the 90 days trading horizon Episil Holding is expected to generate 1.07 times more return on investment than Episil Precision. However, Episil Holding is 1.07 times more volatile than Episil Precision. It trades about -0.12 of its potential returns per unit of risk. Episil Precision is currently generating about -0.17 per unit of risk. If you would invest  5,130  in Episil Holding on October 9, 2024 and sell it today you would lose (500.00) from holding Episil Holding or give up 9.75% of portfolio value over 90 days.

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

Episil Holding  vs.  Episil Precision

Episil Holding

Risk-Adjusted Performance

0 of 100

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 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.

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.

Pair Trading with Episil Holding and Episil Precision

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

The idea behind Episil Holding and Episil Precision 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.