Correlation Between EPAM Systems and International Business
Can any of the company-specific risk be diversified away by investing in both EPAM Systems and International Business 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 EPAM Systems and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and International Business Machines, you can compare the effects of market volatilities on EPAM Systems and International Business 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 EPAM Systems with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and International Business.
Diversification Opportunities for EPAM Systems and International Business
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between EPAM and International is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and EPAM Systems 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 EPAM Systems are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of EPAM Systems i.e., EPAM Systems and International Business go up and down completely randomly.
Pair Corralation between EPAM Systems and International Business
Given the investment horizon of 90 days EPAM Systems is expected to under-perform the International Business. In addition to that, EPAM Systems is 1.23 times more volatile than International Business Machines. It trades about -0.11 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.06 per unit of volatility. If you would invest 17,236 in International Business Machines on January 24, 2024 and sell it today you would earn a total of 954.00 from holding International Business Machines or generate 5.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPAM Systems vs. International Business Machine
Performance |
| Timeline |
| EPAM Systems |
| International Business |
EPAM Systems and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and International Business
The main advantage of trading using opposite EPAM Systems and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| EPAM Systems vs. FiscalNote Holdings | EPAM Systems vs. Innodata | EPAM Systems vs. Aurora Innovation | EPAM Systems vs. Conduent |
| International Business vs. FiscalNote Holdings | International Business vs. Innodata | International Business vs. Aurora Innovation | International Business vs. Conduent |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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