Correlation Between EPSILON HEALTHCARE and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both EPSILON HEALTHCARE and Spirent Communications 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 EPSILON HEALTHCARE and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPSILON HEALTHCARE LTD and Spirent Communications plc, you can compare the effects of market volatilities on EPSILON HEALTHCARE and Spirent Communications 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 EPSILON HEALTHCARE with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPSILON HEALTHCARE and Spirent Communications.
Diversification Opportunities for EPSILON HEALTHCARE and Spirent Communications
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EPSILON and Spirent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EPSILON HEALTHCARE LTD and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and EPSILON HEALTHCARE 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 EPSILON HEALTHCARE LTD are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of EPSILON HEALTHCARE i.e., EPSILON HEALTHCARE and Spirent Communications go up and down completely randomly.
Pair Corralation between EPSILON HEALTHCARE and Spirent Communications
Assuming the 90 days trading horizon EPSILON HEALTHCARE LTD is expected to generate 3.37 times more return on investment than Spirent Communications. However, EPSILON HEALTHCARE is 3.37 times more volatile than Spirent Communications plc. It trades about 0.05 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.01 per unit of risk. If you would invest 0.95 in EPSILON HEALTHCARE LTD on September 13, 2024 and sell it today you would lose (0.20) from holding EPSILON HEALTHCARE LTD or give up 21.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
EPSILON HEALTHCARE LTD vs. Spirent Communications plc
Performance |
| Timeline |
| EPSILON HEALTHCARE LTD |
| Spirent Communications |
EPSILON HEALTHCARE and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPSILON HEALTHCARE and Spirent Communications
The main advantage of trading using opposite EPSILON HEALTHCARE and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPSILON HEALTHCARE position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| EPSILON HEALTHCARE vs. Merck Company | EPSILON HEALTHCARE vs. Elanco Animal Health | EPSILON HEALTHCARE vs. Superior Plus Corp | EPSILON HEALTHCARE vs. NMI Holdings |
| Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. SIVERS SEMICONDUCTORS AB | Spirent Communications vs. Norsk Hydro ASA | Spirent Communications vs. Reliance Steel Aluminum |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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