Correlation Between Epsilon Healthcare and Sensen Networks

Can any of the company-specific risk be diversified away by investing in both Epsilon Healthcare and Sensen Networks 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 Sensen Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Epsilon Healthcare and Sensen Networks, you can compare the effects of market volatilities on Epsilon Healthcare and Sensen Networks 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 Sensen Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epsilon Healthcare and Sensen Networks.

Diversification Opportunities for Epsilon Healthcare and Sensen Networks

0.0

Correlation Coefficient

Epsilon Healthcare  Sensen Networks

Pay attention - limited upside

The 3 months correlation between Epsilon and Sensen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Epsilon Healthcare and Sensen Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensen Networks 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 are associated (or correlated) with Sensen Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensen Networks has no effect on the direction of Epsilon Healthcare i.e., Epsilon Healthcare and Sensen Networks go up and down completely randomly.

Pair Corralation between Epsilon Healthcare and Sensen Networks

Assuming the 90 days trading horizon Epsilon Healthcare is expected to generate 1.79 times less return on investment than Sensen Networks. But when comparing it to its historical volatility, Epsilon Healthcare is 1.59 times less risky than Sensen Networks. It trades about 0.02 of its potential returns per unit of risk. Sensen Networks is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5.20  in Sensen Networks on September 24, 2024 and sell it today you would lose (1.60) from holding Sensen Networks or give up 30.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Epsilon Healthcare  vs.  Sensen Networks

Epsilon Healthcare

Risk-Adjusted Performance

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Very Weak

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

Sensen Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensen Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Epsilon Healthcare and Sensen Networks

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

The idea behind Epsilon Healthcare and Sensen Networks 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 Stocks Directory module to find actively traded stocks across global markets.