Correlation Between EPAM Systems and Brand Engagement

Can any of the company-specific risk be diversified away by investing in both EPAM Systems and Brand Engagement 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 EPAM Systems and Brand Engagement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EPAM Systems and Brand Engagement Network, you can compare the effects of market volatilities on EPAM Systems and Brand Engagement 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 EPAM Systems with a short position of Brand Engagement. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and Brand Engagement.

Diversification Opportunities for EPAM Systems and Brand Engagement

0.25

Correlation Coefficient

EPAM Systems  Brand Engagement

Modest diversification

The 3 months correlation between EPAM and Brand is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Brand Engagement Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brand Engagement Network and EPAM Systems 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 EPAM Systems are associated (or correlated) with Brand Engagement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brand Engagement Network has no effect on the direction of EPAM Systems i.e., EPAM Systems and Brand Engagement go up and down completely randomly.

Pair Corralation between EPAM Systems and Brand Engagement

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the Brand Engagement. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 13.43 times less risky than Brand Engagement. The stock trades about -0.19 of its potential returns per unit of risk. The Brand Engagement Network is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.98  in Brand Engagement Network on December 19, 2024 and sell it today you would lose (0.98) from holding Brand Engagement Network or give up 24.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	83.05%
Values	Daily Returns

EPAM Systems  vs.  Brand Engagement Network

EPAM Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Brand Engagement Network

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brand Engagement Network are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, Brand Engagement showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPAM Systems and Brand Engagement

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

The idea behind EPAM Systems and Brand Engagement Network 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.