Correlation Between 88 Energy and EMvision Medical

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Can any of the company-specific risk be diversified away by investing in both 88 Energy and EMvision 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 88 Energy and EMvision Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy and EMvision Medical Devices, you can compare the effects of market volatilities on 88 Energy and EMvision 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 88 Energy with a short position of EMvision Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and EMvision Medical.

Diversification Opportunities for 88 Energy and EMvision Medical

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between 88E and EMvision is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices and 88 Energy 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 88 Energy are associated (or correlated) with EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of 88 Energy i.e., 88 Energy and EMvision Medical go up and down completely randomly.

Pair Corralation between 88 Energy and EMvision Medical

Assuming the 90 days trading horizon 88 Energy is expected to generate 5.9 times more return on investment than EMvision Medical. However, 88 Energy is 5.9 times more volatile than EMvision Medical Devices. It trades about 0.08 of its potential returns per unit of risk. EMvision Medical Devices is currently generating about 0.04 per unit of risk. If you would invest  0.40  in 88 Energy on September 5, 2024 and sell it today you would lose (0.30) from holding 88 Energy or give up 75.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

88 Energy  vs.  EMvision Medical Devices

 Performance 
       Timeline  
88 Energy 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in 88 Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, 88 Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.
EMvision Medical Devices 

Risk-Adjusted Performance

0 of 100

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

88 Energy and EMvision Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 88 Energy and EMvision Medical

The main advantage of trading using opposite 88 Energy and EMvision Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, EMvision 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 EMvision Medical will offset losses from the drop in EMvision Medical's long position.
The idea behind 88 Energy and EMvision Medical Devices 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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