Correlation Between Oceania Healthcare and Epsilon Healthcare

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

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

Diversification Opportunities for Oceania Healthcare and Epsilon Healthcare

0.0

Correlation Coefficient

Oceania Healthcare  Epsilon Healthcare

Pay attention - limited upside

The 3 months correlation between Oceania and Epsilon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oceania Healthcare and Epsilon Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Healthcare and Oceania 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 Oceania Healthcare 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 has no effect on the direction of Oceania Healthcare i.e., Oceania Healthcare and Epsilon Healthcare go up and down completely randomly.

Pair Corralation between Oceania Healthcare and Epsilon Healthcare

If you would invest  2.40  in Epsilon Healthcare on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Epsilon Healthcare or generate 0.0% return on investment over 90 days.

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

Oceania Healthcare  vs.  Epsilon Healthcare

Oceania Healthcare

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Oceania Healthcare and Epsilon Healthcare

The main advantage of trading using opposite Oceania Healthcare and Epsilon Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceania Healthcare 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 Oceania Healthcare and Epsilon Healthcare 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.