Correlation Between Episurf Medical and Lindab International

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

Diversification Opportunities for Episurf Medical and Lindab International

-0.15

Correlation Coefficient

Episurf Medical  Lindab International

Good diversification

The 3 months correlation between Episurf and Lindab is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Lindab International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindab International 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 Lindab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindab International has no effect on the direction of Episurf Medical i.e., Episurf Medical and Lindab International go up and down completely randomly.

Pair Corralation between Episurf Medical and Lindab International

Assuming the 90 days trading horizon Episurf Medical AB is expected to under-perform the Lindab International. In addition to that, Episurf Medical is 2.35 times more volatile than Lindab International AB. It trades about -0.09 of its total potential returns per unit of risk. Lindab International AB is currently generating about 0.04 per unit of volatility. If you would invest  14,002  in Lindab International AB on October 20, 2024 and sell it today you would earn a total of  4,378  from holding Lindab International AB or generate 31.27% 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.  Lindab International 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 somewhat strong forward indicators, Episurf Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Lindab International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindab International AB 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 Lindab International

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

The idea behind Episurf Medical AB and Lindab International 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.