Correlation Between Episurf Medical and Online Brands

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

Diversification Opportunities for Episurf Medical and Online Brands

-0.72

Correlation Coefficient

Episurf Medical  Online Brands

Pay attention - limited upside

The 3 months correlation between Episurf and Online is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Online Brands Nordic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Online Brands Nordic 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 Online Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Online Brands Nordic has no effect on the direction of Episurf Medical i.e., Episurf Medical and Online Brands go up and down completely randomly.

Pair Corralation between Episurf Medical and Online Brands

Assuming the 90 days trading horizon Episurf Medical AB is expected to under-perform the Online Brands. But the stock apears to be less risky and, when comparing its historical volatility, Episurf Medical AB is 1.04 times less risky than Online Brands. The stock trades about -0.05 of its potential returns per unit of risk. The Online Brands Nordic is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,215  in Online Brands Nordic on September 1, 2024 and sell it today you would lose (130.00) from holding Online Brands Nordic or give up 10.7% of portfolio value over 90 days.

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

Episurf Medical AB  vs.  Online Brands Nordic

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 uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Online Brands Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Online Brands Nordic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Online Brands is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Episurf Medical and Online Brands

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

The idea behind Episurf Medical AB and Online Brands Nordic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.