Correlation Between EMvision Medical and Karoon Energy

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

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

Diversification Opportunities for EMvision Medical and Karoon Energy

0.64

Correlation Coefficient

EMvision Medical  Karoon Energy

Poor diversification

The 3 months correlation between EMvision and Karoon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding EMvision Medical Devices and Karoon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karoon Energy and EMvision 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 EMvision Medical Devices are associated (or correlated) with Karoon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karoon Energy has no effect on the direction of EMvision Medical i.e., EMvision Medical and Karoon Energy go up and down completely randomly.

Pair Corralation between EMvision Medical and Karoon Energy

Assuming the 90 days trading horizon EMvision Medical Devices is expected to under-perform the Karoon Energy. In addition to that, EMvision Medical is 1.1 times more volatile than Karoon Energy. It trades about -0.04 of its total potential returns per unit of risk. Karoon Energy is currently generating about -0.04 per unit of volatility. If you would invest  155.00  in Karoon Energy on October 10, 2024 and sell it today you would lose (11.00) from holding Karoon Energy or give up 7.1% of portfolio value over 90 days.

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

EMvision Medical Devices  vs.  Karoon Energy

EMvision Medical Devices

Risk-Adjusted Performance

0 of 100

Very Weak

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

Karoon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EMvision Medical and Karoon Energy

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

The idea behind EMvision Medical Devices and Karoon Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.