Correlation Between Episurf Medical and Clinical Laserthermia

Can any of the company-specific risk be diversified away by investing in both Episurf Medical and Clinical Laserthermia 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 Clinical Laserthermia 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 Clinical Laserthermia Systems, you can compare the effects of market volatilities on Episurf Medical and Clinical Laserthermia 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 Clinical Laserthermia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Episurf Medical and Clinical Laserthermia.

Diversification Opportunities for Episurf Medical and Clinical Laserthermia

0.03

Correlation Coefficient

Episurf Medical  Clinical Laserthermia

Significant diversification

The 3 months correlation between Episurf and Clinical is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Clinical Laserthermia Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clinical Laserthermia 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 Clinical Laserthermia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clinical Laserthermia has no effect on the direction of Episurf Medical i.e., Episurf Medical and Clinical Laserthermia go up and down completely randomly.

Pair Corralation between Episurf Medical and Clinical Laserthermia

Assuming the 90 days trading horizon Episurf Medical AB is expected to under-perform the Clinical Laserthermia. But the stock apears to be less risky and, when comparing its historical volatility, Episurf Medical AB is 1.88 times less risky than Clinical Laserthermia. The stock trades about -0.07 of its potential returns per unit of risk. The Clinical Laserthermia Systems is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,069  in Clinical Laserthermia Systems on September 4, 2024 and sell it today you would lose (4,653) from holding Clinical Laserthermia Systems or give up 91.79% of portfolio value over 90 days.

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

Episurf Medical AB  vs.  Clinical Laserthermia Systems

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.

Clinical Laserthermia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clinical Laserthermia Systems 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 Clinical Laserthermia

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

The idea behind Episurf Medical AB and Clinical Laserthermia Systems 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.