Correlation Between EPSILON HEALTHCARE and Sims Metal
Can any of the company-specific risk be diversified away by investing in both EPSILON HEALTHCARE and Sims Metal 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 Sims Metal 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 Sims Metal Management, you can compare the effects of market volatilities on EPSILON HEALTHCARE and Sims Metal 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 Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPSILON HEALTHCARE and Sims Metal.
Diversification Opportunities for EPSILON HEALTHCARE and Sims Metal
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EPSILON and Sims is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EPSILON HEALTHCARE LTD and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management 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 Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of EPSILON HEALTHCARE i.e., EPSILON HEALTHCARE and Sims Metal go up and down completely randomly.
Pair Corralation between EPSILON HEALTHCARE and Sims Metal
Assuming the 90 days trading horizon EPSILON HEALTHCARE LTD is expected to generate 6.73 times more return on investment than Sims Metal. However, EPSILON HEALTHCARE is 6.73 times more volatile than Sims Metal Management. It trades about 0.05 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.01 per unit of risk. If you would invest 1.05 in EPSILON HEALTHCARE LTD on September 3, 2024 and sell it today you would lose (0.30) from holding EPSILON HEALTHCARE LTD or give up 28.57% 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. Sims Metal Management
Performance |
| Timeline |
| EPSILON HEALTHCARE LTD |
| Sims Metal Management |
EPSILON HEALTHCARE and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPSILON HEALTHCARE and Sims Metal
The main advantage of trading using opposite EPSILON HEALTHCARE and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPSILON HEALTHCARE position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| EPSILON HEALTHCARE vs. Scientific Games | EPSILON HEALTHCARE vs. Entravision Communications | EPSILON HEALTHCARE vs. Zoom Video Communications | EPSILON HEALTHCARE vs. China Communications Services |
| Sims Metal vs. ArcelorMittal | Sims Metal vs. Steel Dynamics | Sims Metal vs. NIPPON STEEL SPADR | Sims Metal vs. POSCO Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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