Correlation Between Karoon Energy and EMvision Medical

Can any of the company-specific risk be diversified away by investing in both Karoon Energy and EMvision Medical 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 Karoon Energy and EMvision Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Karoon Energy and EMvision Medical Devices, you can compare the effects of market volatilities on Karoon Energy and EMvision Medical 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 Karoon Energy with a short position of EMvision Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karoon Energy and EMvision Medical.

Diversification Opportunities for Karoon Energy and EMvision Medical

0.64

Correlation Coefficient

Karoon Energy  EMvision Medical

Poor diversification

The 3 months correlation between Karoon and EMvision is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Karoon Energy and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices and Karoon Energy 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 Karoon Energy are associated (or correlated) with EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of Karoon Energy i.e., Karoon Energy and EMvision Medical go up and down completely randomly.

Pair Corralation between Karoon Energy and EMvision Medical

Assuming the 90 days trading horizon Karoon Energy is expected to generate 1.32 times more return on investment than EMvision Medical. However, Karoon Energy is 1.32 times more volatile than EMvision Medical Devices. It trades about 0.15 of its potential returns per unit of risk. EMvision Medical Devices is currently generating about -0.04 per unit of risk. If you would invest  132.00  in Karoon Energy on October 10, 2024 and sell it today you would earn a total of  12.00  from holding Karoon Energy or generate 9.09% return on investment over 90 days.

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

Karoon Energy  vs.  EMvision Medical Devices

Karoon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

EMvision Medical Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMvision Medical Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, EMvision Medical 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 Karoon Energy and EMvision Medical

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

The idea behind Karoon Energy and EMvision Medical Devices 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.