Correlation Between Surgical Science and Embracer Group

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

By analyzing existing cross correlation between Surgical Science Sweden and Embracer Group AB, you can compare the effects of market volatilities on Surgical Science and Embracer Group 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 Surgical Science with a short position of Embracer Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surgical Science and Embracer Group.

Diversification Opportunities for Surgical Science and Embracer Group

0.5

Correlation Coefficient

Surgical Science  Embracer Group

Very weak diversification

The 3 months correlation between Surgical and Embracer is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Surgical Science Sweden and Embracer Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embracer Group AB and Surgical Science 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 Surgical Science Sweden are associated (or correlated) with Embracer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embracer Group AB has no effect on the direction of Surgical Science i.e., Surgical Science and Embracer Group go up and down completely randomly.

Pair Corralation between Surgical Science and Embracer Group

Assuming the 90 days trading horizon Surgical Science Sweden is expected to generate 0.97 times more return on investment than Embracer Group. However, Surgical Science Sweden is 1.03 times less risky than Embracer Group. It trades about 0.22 of its potential returns per unit of risk. Embracer Group AB is currently generating about 0.04 per unit of risk. If you would invest  12,370  in Surgical Science Sweden on September 23, 2024 and sell it today you would earn a total of  3,780  from holding Surgical Science Sweden or generate 30.56% return on investment over 90 days.

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

Surgical Science Sweden  vs.  Embracer Group AB

Surgical Science Sweden

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Surgical Science Sweden are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Surgical Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Embracer Group AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embracer Group AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Embracer Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Surgical Science and Embracer Group

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

The idea behind Surgical Science Sweden and Embracer Group AB 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..