Correlation Between Episurf Medical and Avensia Publ

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

By analyzing existing cross correlation between Episurf Medical AB and Avensia publ AB, you can compare the effects of market volatilities on Episurf Medical and Avensia Publ 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 Episurf Medical with a short position of Avensia Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Episurf Medical and Avensia Publ.

Diversification Opportunities for Episurf Medical and Avensia Publ

-0.48

Correlation Coefficient

Episurf Medical  Avensia Publ

Very good diversification

The 3 months correlation between Episurf and Avensia is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Avensia publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avensia publ AB and Episurf 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 Episurf Medical AB are associated (or correlated) with Avensia Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avensia publ AB has no effect on the direction of Episurf Medical i.e., Episurf Medical and Avensia Publ go up and down completely randomly.

Pair Corralation between Episurf Medical and Avensia Publ

Assuming the 90 days trading horizon Episurf Medical AB is expected to under-perform the Avensia Publ. In addition to that, Episurf Medical is 2.35 times more volatile than Avensia publ AB. It trades about -0.23 of its total potential returns per unit of risk. Avensia publ AB is currently generating about 0.11 per unit of volatility. If you would invest  776.00  in Avensia publ AB on September 21, 2024 and sell it today you would earn a total of  30.00  from holding Avensia publ AB or generate 3.87% return on investment over 90 days.

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

Episurf Medical AB  vs.  Avensia publ AB

Episurf Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Episurf Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Avensia publ AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avensia publ AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Episurf Medical and Avensia Publ

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

The idea behind Episurf Medical AB and Avensia publ AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.