Correlation Between Excelsior Medical and Easywell Biomedicals

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

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

Diversification Opportunities for Excelsior Medical and Easywell Biomedicals

0.09

Correlation Coefficient

Excelsior Medical  Easywell Biomedicals

Significant diversification

The 3 months correlation between Excelsior and Easywell is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Easywell Biomedicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easywell Biomedicals and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with Easywell Biomedicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easywell Biomedicals has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Easywell Biomedicals go up and down completely randomly.

Pair Corralation between Excelsior Medical and Easywell Biomedicals

Assuming the 90 days trading horizon Excelsior Medical is expected to generate 6.9 times less return on investment than Easywell Biomedicals. But when comparing it to its historical volatility, Excelsior Medical Co is 11.09 times less risky than Easywell Biomedicals. It trades about 0.05 of its potential returns per unit of risk. Easywell Biomedicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,780  in Easywell Biomedicals on December 3, 2024 and sell it today you would earn a total of  180.00  from holding Easywell Biomedicals or generate 2.65% return on investment over 90 days.

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

Excelsior Medical Co  vs.  Easywell Biomedicals

Excelsior Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Excelsior Medical Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Excelsior Medical is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Easywell Biomedicals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Easywell Biomedicals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Easywell Biomedicals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Excelsior Medical and Easywell Biomedicals

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

The idea behind Excelsior Medical Co and Easywell Biomedicals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.