Correlation Between EPSILON HEALTHCARE and Range Resources

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

By analyzing existing cross correlation between EPSILON HEALTHCARE LTD and Range Resources Corp, you can compare the effects of market volatilities on EPSILON HEALTHCARE and Range Resources 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 EPSILON HEALTHCARE with a short position of Range Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPSILON HEALTHCARE and Range Resources.

Diversification Opportunities for EPSILON HEALTHCARE and Range Resources

0.0

Correlation Coefficient

EPSILON HEALTHCARE  Range Resources

Pay attention - limited upside

The 3 months correlation between EPSILON and Range is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EPSILON HEALTHCARE LTD and Range Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Range Resources Corp and EPSILON HEALTHCARE 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 EPSILON HEALTHCARE LTD are associated (or correlated) with Range Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Range Resources Corp has no effect on the direction of EPSILON HEALTHCARE i.e., EPSILON HEALTHCARE and Range Resources go up and down completely randomly.

Pair Corralation between EPSILON HEALTHCARE and Range Resources

Assuming the 90 days trading horizon EPSILON HEALTHCARE LTD is expected to generate 10.91 times more return on investment than Range Resources. However, EPSILON HEALTHCARE is 10.91 times more volatile than Range Resources Corp. It trades about 0.05 of its potential returns per unit of risk. Range Resources Corp is currently generating about 0.04 per unit of risk. If you would invest  1.05  in EPSILON HEALTHCARE LTD on October 4, 2024 and sell it today you would lose (0.30) from holding EPSILON HEALTHCARE LTD or give up 28.57% of portfolio value over 90 days.

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

EPSILON HEALTHCARE LTD  vs.  Range Resources Corp

EPSILON HEALTHCARE LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPSILON HEALTHCARE LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, EPSILON HEALTHCARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Range Resources Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Range Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with EPSILON HEALTHCARE and Range Resources

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

The idea behind EPSILON HEALTHCARE LTD and Range Resources Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.