Correlation Between DAX Index and EPSILON HEALTHCARE

Can any of the company-specific risk be diversified away by investing in both DAX Index and EPSILON HEALTHCARE 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 DAX Index and EPSILON HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DAX Index and EPSILON HEALTHCARE LTD, you can compare the effects of market volatilities on DAX Index and EPSILON HEALTHCARE 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 DAX Index with a short position of EPSILON HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and EPSILON HEALTHCARE.

Diversification Opportunities for DAX Index and EPSILON HEALTHCARE

0.0

Correlation Coefficient

DAX Index  EPSILON HEALTHCARE

Pay attention - limited upside

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

Pair Corralation between DAX Index and EPSILON HEALTHCARE

If you would invest  2,128,218  in DAX Index on November 28, 2024 and sell it today you would earn a total of  151,193  from holding DAX Index or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

DAX Index  vs.  EPSILON HEALTHCARE LTD

Pair Trading with DAX Index and EPSILON HEALTHCARE

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

The idea behind DAX Index and EPSILON HEALTHCARE LTD 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.