Correlation Between Epsilon Healthcare and Wam Capital

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

By analyzing existing cross correlation between Epsilon Healthcare and Wam Capital, you can compare the effects of market volatilities on Epsilon Healthcare and Wam Capital 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 Wam Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Healthcare and Wam Capital.

Diversification Opportunities for Epsilon Healthcare and Wam Capital

0.0

Correlation Coefficient

Epsilon Healthcare  Wam Capital

Pay attention - limited upside

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

Pair Corralation between Epsilon Healthcare and Wam Capital

If you would invest  160.00  in Wam Capital on November 29, 2024 and sell it today you would earn a total of  8.00  from holding Wam Capital or generate 5.0% return on investment over 90 days.

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

Epsilon Healthcare  vs.  Wam Capital

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.

Wam Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wam Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Wam Capital may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Epsilon Healthcare and Wam Capital

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

The idea behind Epsilon Healthcare and Wam Capital 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.