Correlation Between SUN ART and EPSILON HEALTHCARE

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

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

Diversification Opportunities for SUN ART and EPSILON HEALTHCARE

0.0

Correlation Coefficient

SUN ART  EPSILON HEALTHCARE

Pay attention - limited upside

The 3 months correlation between SUN and EPSILON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SUN ART RETAIL 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 SUN ART 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 SUN ART RETAIL 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 SUN ART i.e., SUN ART and EPSILON HEALTHCARE go up and down completely randomly.

Pair Corralation between SUN ART and EPSILON HEALTHCARE

Assuming the 90 days trading horizon SUN ART is expected to generate 2.83 times less return on investment than EPSILON HEALTHCARE. But when comparing it to its historical volatility, SUN ART RETAIL is 2.6 times less risky than EPSILON HEALTHCARE. It trades about 0.04 of its potential returns per unit of risk. EPSILON HEALTHCARE LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.15  in EPSILON HEALTHCARE LTD on September 23, 2024 and sell it today you would lose (0.40) from holding EPSILON HEALTHCARE LTD or give up 34.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

SUN ART RETAIL  vs.  EPSILON HEALTHCARE LTD

SUN ART RETAIL

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SUN ART RETAIL are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, SUN ART exhibited solid returns over the last few months and may actually be approaching a breakup point.

EPSILON HEALTHCARE LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPSILON HEALTHCARE LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, EPSILON HEALTHCARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SUN ART and EPSILON HEALTHCARE

The main advantage of trading using opposite SUN ART and EPSILON HEALTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN ART 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 SUN ART RETAIL 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..