Correlation Between Episurf Medical and Nexam Chemical

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

Diversification Opportunities for Episurf Medical and Nexam Chemical

0.06

Correlation Coefficient

Episurf Medical  Nexam Chemical

Significant diversification

The 3 months correlation between Episurf and Nexam is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding 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 Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Episurf Medical i.e., Episurf Medical and Nexam Chemical go up and down completely randomly.

Pair Corralation between Episurf Medical and Nexam Chemical

Assuming the 90 days trading horizon Episurf Medical is expected to generate 1.55 times less return on investment than Nexam Chemical. In addition to that, Episurf Medical is 2.14 times more volatile than Nexam Chemical Holding. It trades about 0.03 of its total potential returns per unit of risk. Nexam Chemical Holding is currently generating about 0.11 per unit of volatility. If you would invest  389.00  in Nexam Chemical Holding on October 11, 2024 and sell it today you would earn a total of  25.00  from holding Nexam Chemical Holding or generate 6.43% return on investment over 90 days.

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

Episurf Medical AB  vs.  Nexam Chemical Holding

Episurf Medical AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Episurf Medical AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Episurf Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Nexam Chemical Holding

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexam Chemical Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nexam Chemical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Episurf Medical and Nexam Chemical

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

The idea behind Episurf Medical AB and Nexam Chemical Holding 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..