Correlation Between Episurf Medical and Xbrane Biopharma

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

Diversification Opportunities for Episurf Medical and Xbrane Biopharma

-0.2

Correlation Coefficient

Episurf Medical  Xbrane Biopharma

Good diversification

The 3 months correlation between Episurf and Xbrane is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Episurf Medical AB and Xbrane Biopharma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xbrane Biopharma 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 Xbrane Biopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xbrane Biopharma has no effect on the direction of Episurf Medical i.e., Episurf Medical and Xbrane Biopharma go up and down completely randomly.

Pair Corralation between Episurf Medical and Xbrane Biopharma

Assuming the 90 days trading horizon Episurf Medical AB is expected to under-perform the Xbrane Biopharma. But the stock apears to be less risky and, when comparing its historical volatility, Episurf Medical AB is 1.3 times less risky than Xbrane Biopharma. The stock trades about -0.09 of its potential returns per unit of risk. The Xbrane Biopharma AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Xbrane Biopharma AB on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Xbrane Biopharma AB or generate 6.25% return on investment over 90 days.

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

Episurf Medical AB  vs.  Xbrane Biopharma 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 uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xbrane Biopharma

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xbrane Biopharma AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Xbrane Biopharma sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Episurf Medical and Xbrane Biopharma

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

The idea behind Episurf Medical AB and Xbrane Biopharma 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.