Correlation Between EGF Theramed and Caduceus Software

Can any of the company-specific risk be diversified away by investing in both EGF Theramed and Caduceus Software 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 EGF Theramed and Caduceus Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EGF Theramed Health and Caduceus Software Systems, you can compare the effects of market volatilities on EGF Theramed and Caduceus Software 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 EGF Theramed with a short position of Caduceus Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGF Theramed and Caduceus Software.

Diversification Opportunities for EGF Theramed and Caduceus Software

-0.29

Correlation Coefficient

EGF Theramed  Caduceus Software

Very good diversification

The 3 months correlation between EGF and Caduceus is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding EGF Theramed Health and Caduceus Software Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caduceus Software Systems and EGF Theramed 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 EGF Theramed Health are associated (or correlated) with Caduceus Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caduceus Software Systems has no effect on the direction of EGF Theramed i.e., EGF Theramed and Caduceus Software go up and down completely randomly.

Pair Corralation between EGF Theramed and Caduceus Software

Assuming the 90 days horizon EGF Theramed Health is expected to generate 2.29 times more return on investment than Caduceus Software. However, EGF Theramed is 2.29 times more volatile than Caduceus Software Systems. It trades about 0.09 of its potential returns per unit of risk. Caduceus Software Systems is currently generating about 0.07 per unit of risk. If you would invest  10.00  in EGF Theramed Health on December 28, 2024 and sell it today you would lose (5.10) from holding EGF Theramed Health or give up 51.0% of portfolio value over 90 days.

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

EGF Theramed Health  vs.  Caduceus Software Systems

EGF Theramed Health

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EGF Theramed Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, EGF Theramed reported solid returns over the last few months and may actually be approaching a breakup point.

Caduceus Software Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caduceus Software Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Caduceus Software exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EGF Theramed and Caduceus Software

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

The idea behind EGF Theramed Health and Caduceus Software Systems 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.