Correlation Between Epsilon Healthcare and Australian Unity

Can any of the company-specific risk be diversified away by investing in both Epsilon Healthcare and Australian Unity 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 Epsilon Healthcare and Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Epsilon Healthcare and Australian Unity Office, you can compare the effects of market volatilities on Epsilon Healthcare and Australian Unity 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 Epsilon Healthcare with a short position of Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Healthcare and Australian Unity.

Diversification Opportunities for Epsilon Healthcare and Australian Unity

0.0

Correlation Coefficient

Epsilon Healthcare  Australian Unity

Pay attention - limited upside

The 3 months correlation between Epsilon and Australian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Healthcare and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office and Epsilon Healthcare 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 Epsilon Healthcare are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Epsilon Healthcare i.e., Epsilon Healthcare and Australian Unity go up and down completely randomly.

Pair Corralation between Epsilon Healthcare and Australian Unity

If you would invest  106.00  in Australian Unity Office on November 29, 2024 and sell it today you would earn a total of  4.00  from holding Australian Unity Office or generate 3.77% return on investment over 90 days.

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

Epsilon Healthcare  vs.  Australian Unity Office

Epsilon Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Epsilon Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Epsilon Healthcare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Australian Unity Office

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Unity Office are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Australian Unity is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Epsilon Healthcare and Australian Unity

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

The idea behind Epsilon Healthcare and Australian Unity Office 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.