Correlation Between Metro Mining and Epsilon Healthcare

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Can any of the company-specific risk be diversified away by investing in both Metro Mining and Epsilon Healthcare 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 Metro Mining and Epsilon Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Epsilon Healthcare, you can compare the effects of market volatilities on Metro Mining and Epsilon Healthcare 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 Metro Mining with a short position of Epsilon Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Epsilon Healthcare.

Diversification Opportunities for Metro Mining and Epsilon Healthcare

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Metro and Epsilon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Epsilon Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epsilon Healthcare and Metro Mining 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 Metro Mining are associated (or correlated) with Epsilon Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epsilon Healthcare has no effect on the direction of Metro Mining i.e., Metro Mining and Epsilon Healthcare go up and down completely randomly.

Pair Corralation between Metro Mining and Epsilon Healthcare

If you would invest  3.60  in Metro Mining on September 5, 2024 and sell it today you would earn a total of  2.80  from holding Metro Mining or generate 77.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Metro Mining  vs.  Epsilon Healthcare

 Performance 
       Timeline  
Metro Mining 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Metro Mining are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Metro Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.
Epsilon Healthcare 

Risk-Adjusted Performance

0 of 100

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

Metro Mining and Epsilon Healthcare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Metro Mining and Epsilon Healthcare

The main advantage of trading using opposite Metro Mining and Epsilon Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Epsilon Healthcare 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 Epsilon Healthcare will offset losses from the drop in Epsilon Healthcare's long position.
The idea behind Metro Mining and Epsilon Healthcare 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.
Check out your portfolio center.
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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