Correlation Between Episurf Medical and Senzime AB

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

Diversification Opportunities for Episurf Medical and Senzime AB

0.07

Correlation Coefficient

Episurf Medical  Senzime AB

Significant diversification

The 3 months correlation between Episurf and Senzime is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Senzime AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senzime 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 Senzime AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senzime AB has no effect on the direction of Episurf Medical i.e., Episurf Medical and Senzime AB go up and down completely randomly.

Pair Corralation between Episurf Medical and Senzime AB

Assuming the 90 days trading horizon Episurf Medical AB is expected to generate 2.71 times more return on investment than Senzime AB. However, Episurf Medical is 2.71 times more volatile than Senzime AB. It trades about 0.05 of its potential returns per unit of risk. Senzime AB is currently generating about -0.12 per unit of risk. If you would invest  12.00  in Episurf Medical AB on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Episurf Medical AB or generate 8.33% 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.  Senzime AB

Episurf Medical AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Episurf Medical AB are ranked lower than 3 (%) 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.

Senzime AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Senzime AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Senzime AB

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

The idea behind Episurf Medical AB and Senzime 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.