Correlation Between TRON and Episil Holding

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

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

Diversification Opportunities for TRON and Episil Holding

0.02

Correlation Coefficient

TRON  Episil Holding

Significant diversification

The 3 months correlation between TRON and Episil is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Episil Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episil Holding and TRON 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 TRON are associated (or correlated) with Episil Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episil Holding has no effect on the direction of TRON i.e., TRON and Episil Holding go up and down completely randomly.

Pair Corralation between TRON and Episil Holding

Assuming the 90 days trading horizon TRON is expected to under-perform the Episil Holding. In addition to that, TRON is 1.25 times more volatile than Episil Holding. It trades about -0.02 of its total potential returns per unit of risk. Episil Holding is currently generating about 0.04 per unit of volatility. If you would invest  4,590  in Episil Holding on December 21, 2024 and sell it today you would earn a total of  160.00  from holding Episil Holding or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.5%
Values	Daily Returns

TRON  vs.  Episil Holding

TRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TRON is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Episil Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Episil Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Episil Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with TRON and Episil Holding

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

The idea behind TRON and Episil Holding 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.