Correlation Between RBC Bearings and EPSILON HEALTHCARE

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

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

Diversification Opportunities for RBC Bearings and EPSILON HEALTHCARE

0.0

Correlation Coefficient

RBC Bearings  EPSILON HEALTHCARE

Pay attention - limited upside

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

Pair Corralation between RBC Bearings and EPSILON HEALTHCARE

Assuming the 90 days horizon RBC Bearings is expected to generate 9.39 times less return on investment than EPSILON HEALTHCARE. But when comparing it to its historical volatility, RBC Bearings Incorporated is 7.55 times less risky than EPSILON HEALTHCARE. It trades about 0.04 of its potential returns per unit of risk. EPSILON HEALTHCARE LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.10  in EPSILON HEALTHCARE LTD on October 26, 2024 and sell it today you would lose (0.35) from holding EPSILON HEALTHCARE LTD or give up 31.82% of portfolio value over 90 days.

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

RBC Bearings Incorporated  vs.  EPSILON HEALTHCARE LTD

RBC Bearings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RBC Bearings reported solid returns over the last few months and may actually be approaching a breakup point.

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RBC Bearings and EPSILON HEALTHCARE

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

The idea behind RBC Bearings Incorporated and EPSILON HEALTHCARE LTD 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.