Correlation Between Oceania Healthcare and EP Financial
Can any of the company-specific risk be diversified away by investing in both Oceania Healthcare and EP Financial 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 Oceania Healthcare and EP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceania Healthcare and EP Financial Group, you can compare the effects of market volatilities on Oceania Healthcare and EP Financial 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 Oceania Healthcare with a short position of EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceania Healthcare and EP Financial.
Diversification Opportunities for Oceania Healthcare and EP Financial
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oceania and EP1 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oceania Healthcare and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Oceania 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 Oceania Healthcare are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Oceania Healthcare i.e., Oceania Healthcare and EP Financial go up and down completely randomly.
Pair Corralation between Oceania Healthcare and EP Financial
Assuming the 90 days trading horizon Oceania Healthcare is expected to generate 1.69 times less return on investment than EP Financial. In addition to that, Oceania Healthcare is 2.42 times more volatile than EP Financial Group. It trades about 0.05 of its total potential returns per unit of risk. EP Financial Group is currently generating about 0.21 per unit of volatility. If you would invest 48.00 in EP Financial Group on September 13, 2024 and sell it today you would earn a total of 4.00 from holding EP Financial Group or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oceania Healthcare vs. EP Financial Group
Performance |
| Timeline |
| Oceania Healthcare |
| EP Financial Group |
Oceania Healthcare and EP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceania Healthcare and EP Financial
The main advantage of trading using opposite Oceania Healthcare and EP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceania Healthcare position performs unexpectedly, EP Financial 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 EP Financial will offset losses from the drop in EP Financial's long position.| Oceania Healthcare vs. Energy Resources | Oceania Healthcare vs. 88 Energy | Oceania Healthcare vs. Amani Gold | Oceania Healthcare vs. A1 Investments Resources |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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