Correlation Between SPASX 300 and EMvision Medical

Can any of the company-specific risk be diversified away by investing in both SPASX 300 and EMvision Medical 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 SPASX 300 and EMvision Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPASX 300 Media and EMvision Medical Devices, you can compare the effects of market volatilities on SPASX 300 and EMvision Medical 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 SPASX 300 with a short position of EMvision Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX 300 and EMvision Medical.

Diversification Opportunities for SPASX 300 and EMvision Medical

0.38

Correlation Coefficient

SPASX 300  EMvision Medical

Weak diversification

The 3 months correlation between SPASX and EMvision is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SPASX 300 Media and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices and SPASX 300 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 SPASX 300 Media are associated (or correlated) with EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of SPASX 300 i.e., SPASX 300 and EMvision Medical go up and down completely randomly.

Pair Corralation between SPASX 300 and EMvision Medical

Assuming the 90 days trading horizon SPASX 300 is expected to generate 5.04 times less return on investment than EMvision Medical. But when comparing it to its historical volatility, SPASX 300 Media is 3.75 times less risky than EMvision Medical. It trades about 0.08 of its potential returns per unit of risk. EMvision Medical Devices is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  147.00  in EMvision Medical Devices on January 19, 2024 and sell it today you would earn a total of  81.00  from holding EMvision Medical Devices or generate 55.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

SPASX 300 Media  vs.  EMvision Medical Devices

Pair Trading with SPASX 300 and EMvision Medical

The main advantage of trading using opposite SPASX 300 and EMvision Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPASX 300 position performs unexpectedly, EMvision Medical 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 EMvision Medical will offset losses from the drop in EMvision Medical's long position.

The idea behind SPASX 300 Media and EMvision Medical Devices 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.