Correlation Between Episurf Medical and Real Heart

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

Diversification Opportunities for Episurf Medical and Real Heart

-0.46

Correlation Coefficient

Episurf Medical  Real Heart

Very good diversification

The 3 months correlation between Episurf and Real is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Real Heart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Heart 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 Real Heart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Heart has no effect on the direction of Episurf Medical i.e., Episurf Medical and Real Heart go up and down completely randomly.

Pair Corralation between Episurf Medical and Real Heart

Assuming the 90 days trading horizon Episurf Medical AB is expected to under-perform the Real Heart. But the stock apears to be less risky and, when comparing its historical volatility, Episurf Medical AB is 3.68 times less risky than Real Heart. The stock trades about -0.01 of its potential returns per unit of risk. The Real Heart is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,186  in Real Heart on December 29, 2024 and sell it today you would earn a total of  194.00  from holding Real Heart or generate 16.36% 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.  Real Heart

Episurf Medical AB

Risk-Adjusted Performance

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 somewhat strong forward indicators, Episurf Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Real Heart

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Real Heart are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Real Heart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Episurf Medical and Real Heart

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

The idea behind Episurf Medical AB and Real Heart 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.