Correlation Between EPSILON HEALTHCARE and 3D Systems

Can any of the company-specific risk be diversified away by investing in both EPSILON HEALTHCARE and 3D Systems 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 3D Systems 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 3D Systems, you can compare the effects of market volatilities on EPSILON HEALTHCARE and 3D Systems 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 3D Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPSILON HEALTHCARE and 3D Systems.

Diversification Opportunities for EPSILON HEALTHCARE and 3D Systems

0.0

Correlation Coefficient

EPSILON HEALTHCARE  3D Systems

Pay attention - limited upside

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

Pair Corralation between EPSILON HEALTHCARE and 3D Systems

Assuming the 90 days trading horizon EPSILON HEALTHCARE LTD is expected to generate 3.0 times more return on investment than 3D Systems. However, EPSILON HEALTHCARE is 3.0 times more volatile than 3D Systems. It trades about 0.05 of its potential returns per unit of risk. 3D Systems is currently generating about -0.02 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.  3D Systems

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.

3D Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 3D Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, 3D Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPSILON HEALTHCARE and 3D Systems

The main advantage of trading using opposite EPSILON HEALTHCARE and 3D Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPSILON HEALTHCARE position performs unexpectedly, 3D Systems 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 3D Systems will offset losses from the drop in 3D Systems' long position.

The idea behind EPSILON HEALTHCARE LTD and 3D Systems 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..