Correlation Between Episurf Medical and IAR Systems

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

Diversification Opportunities for Episurf Medical and IAR Systems

-0.23

Correlation Coefficient

Episurf Medical  IAR Systems

Very good diversification

The 3 months correlation between Episurf and IAR is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and IAR Systems Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IAR Systems Group 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 IAR Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IAR Systems Group has no effect on the direction of Episurf Medical i.e., Episurf Medical and IAR Systems go up and down completely randomly.

Pair Corralation between Episurf Medical and IAR Systems

Assuming the 90 days trading horizon Episurf Medical AB is expected to generate 3.58 times more return on investment than IAR Systems. However, Episurf Medical is 3.58 times more volatile than IAR Systems Group. It trades about 0.03 of its potential returns per unit of risk. IAR Systems Group is currently generating about -0.44 per unit of risk. If you would invest  14.00  in Episurf Medical AB on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Episurf Medical AB or generate 0.0% return on investment over 90 days.

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

Episurf Medical AB  vs.  IAR Systems Group

Episurf Medical AB

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Episurf Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat uncertain forward indicators, Episurf Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

IAR Systems Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IAR Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Episurf Medical and IAR Systems

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

The idea behind Episurf Medical AB and IAR Systems Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.