Correlation Between Bio Gene and EP Financial

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

By analyzing existing cross correlation between Bio Gene Technology and EP Financial Group, you can compare the effects of market volatilities on Bio Gene and EP Financial 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 Bio Gene with a short position of EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Gene and EP Financial.

Diversification Opportunities for Bio Gene and EP Financial

-0.09

Correlation Coefficient

Bio Gene  EP Financial

Good diversification

The 3 months correlation between Bio and EP1 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bio Gene Technology and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Bio Gene 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 Bio Gene Technology are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Bio Gene i.e., Bio Gene and EP Financial go up and down completely randomly.

Pair Corralation between Bio Gene and EP Financial

Assuming the 90 days trading horizon Bio Gene Technology is expected to under-perform the EP Financial. In addition to that, Bio Gene is 1.58 times more volatile than EP Financial Group. It trades about -0.01 of its total potential returns per unit of risk. EP Financial Group is currently generating about 0.02 per unit of volatility. If you would invest  49.00  in EP Financial Group on September 13, 2024 and sell it today you would earn a total of  3.00  from holding EP Financial Group or generate 6.12% return on investment over 90 days.

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

Bio Gene Technology  vs.  EP Financial Group

Bio Gene Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bio Gene Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bio Gene is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

EP Financial Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EP Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EP Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bio Gene and EP Financial

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

The idea behind Bio Gene Technology and EP Financial Group 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.