Correlation Between Episurf Medical and Dignitana

Can any of the company-specific risk be diversified away by investing in both Episurf Medical and Dignitana 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 Dignitana 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 Dignitana AB, you can compare the effects of market volatilities on Episurf Medical and Dignitana 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 Dignitana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Episurf Medical and Dignitana.

Diversification Opportunities for Episurf Medical and Dignitana

-0.05

Correlation Coefficient

Episurf Medical  Dignitana

Good diversification

The 3 months correlation between Episurf and Dignitana is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Dignitana AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dignitana 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 Dignitana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dignitana AB has no effect on the direction of Episurf Medical i.e., Episurf Medical and Dignitana go up and down completely randomly.

Pair Corralation between Episurf Medical and Dignitana

Assuming the 90 days trading horizon Episurf Medical AB is expected to under-perform the Dignitana. But the stock apears to be less risky and, when comparing its historical volatility, Episurf Medical AB is 1.5 times less risky than Dignitana. The stock trades about -0.09 of its potential returns per unit of risk. The Dignitana AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Dignitana AB on September 14, 2024 and sell it today you would lose (10.00) from holding Dignitana AB or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Episurf Medical AB  vs.  Dignitana 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 uncertain 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.

Dignitana AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Episurf Medical and Dignitana

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

The idea behind Episurf Medical AB and Dignitana 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.