Correlation Between Stille AB and Episurf Medical

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

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

Diversification Opportunities for Stille AB and Episurf Medical

0.32

Correlation Coefficient

Stille AB  Episurf Medical

Weak diversification

The 3 months correlation between Stille and Episurf is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Stille AB and Episurf Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Episurf Medical AB and Stille AB 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 Stille AB are associated (or correlated) with Episurf Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Episurf Medical AB has no effect on the direction of Stille AB i.e., Stille AB and Episurf Medical go up and down completely randomly.

Pair Corralation between Stille AB and Episurf Medical

Assuming the 90 days trading horizon Stille AB is expected to generate 2.06 times less return on investment than Episurf Medical. But when comparing it to its historical volatility, Stille AB is 3.1 times less risky than Episurf Medical. It trades about 0.13 of its potential returns per unit of risk. Episurf Medical AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Episurf Medical AB on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Episurf Medical AB or generate 7.14% return on investment over 90 days.

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

Stille AB  vs.  Episurf Medical AB

Stille AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stille AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Stille AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Stille AB and Episurf Medical

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

The idea behind Stille AB and Episurf Medical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..