Correlation Between Episurf Medical and Clean Motion

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

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

Diversification Opportunities for Episurf Medical and Clean Motion

0.37

Correlation Coefficient

Episurf Medical  Clean Motion

Weak diversification

The 3 months correlation between Episurf and Clean is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Clean Motion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Motion AB and Episurf Medical 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 Episurf Medical AB are associated (or correlated) with Clean Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Motion AB has no effect on the direction of Episurf Medical i.e., Episurf Medical and Clean Motion go up and down completely randomly.

Pair Corralation between Episurf Medical and Clean Motion

Assuming the 90 days trading horizon Episurf Medical AB is expected to generate 0.8 times more return on investment than Clean Motion. However, Episurf Medical AB is 1.26 times less risky than Clean Motion. It trades about -0.02 of its potential returns per unit of risk. Clean Motion AB is currently generating about -0.16 per unit of risk. If you would invest  17.00  in Episurf Medical AB on September 4, 2024 and sell it today you would lose (2.00) from holding Episurf Medical AB or give up 11.76% of portfolio value over 90 days.

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

Episurf Medical AB  vs.  Clean Motion AB

Episurf Medical AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Episurf Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Episurf Medical is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Clean Motion AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Motion AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Episurf Medical and Clean Motion

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

The idea behind Episurf Medical AB and Clean Motion 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.