Correlation Between Insuline Medical and Epitomee Medical

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

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

Diversification Opportunities for Insuline Medical and Epitomee Medical

-0.33

Correlation Coefficient

Insuline Medical  Epitomee Medical

Very good diversification

The 3 months correlation between Insuline and Epitomee is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Insuline Medical and Epitomee Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epitomee Medical and Insuline 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 Insuline Medical are associated (or correlated) with Epitomee Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epitomee Medical has no effect on the direction of Insuline Medical i.e., Insuline Medical and Epitomee Medical go up and down completely randomly.

Pair Corralation between Insuline Medical and Epitomee Medical

Assuming the 90 days trading horizon Insuline Medical is expected to under-perform the Epitomee Medical. But the stock apears to be less risky and, when comparing its historical volatility, Insuline Medical is 1.2 times less risky than Epitomee Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Epitomee Medical is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  88,740  in Epitomee Medical on September 28, 2024 and sell it today you would earn a total of  6,010  from holding Epitomee Medical or generate 6.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.87%
Values	Daily Returns

Insuline Medical  vs.  Epitomee Medical

Insuline Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insuline Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Epitomee Medical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Epitomee Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Epitomee Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Insuline Medical and Epitomee Medical

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

The idea behind Insuline Medical and Epitomee Medical 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.