Correlation Between Epiroc AB and Getlink SE

Can any of the company-specific risk be diversified away by investing in both Epiroc AB and Getlink SE 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 Epiroc AB and Getlink SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Epiroc AB and Getlink SE, you can compare the effects of market volatilities on Epiroc AB and Getlink SE 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 Epiroc AB with a short position of Getlink SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Epiroc AB and Getlink SE.

Diversification Opportunities for Epiroc AB and Getlink SE

-0.2

Correlation Coefficient

Epiroc AB  Getlink SE

Good diversification

The 3 months correlation between Epiroc and Getlink is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Epiroc AB and Getlink SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getlink SE and Epiroc AB 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 Epiroc AB are associated (or correlated) with Getlink SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getlink SE has no effect on the direction of Epiroc AB i.e., Epiroc AB and Getlink SE go up and down completely randomly.

Pair Corralation between Epiroc AB and Getlink SE

Assuming the 90 days horizon Epiroc AB is expected to generate 2.49 times more return on investment than Getlink SE. However, Epiroc AB is 2.49 times more volatile than Getlink SE. It trades about 0.04 of its potential returns per unit of risk. Getlink SE is currently generating about -0.26 per unit of risk. If you would invest  1,937  in Epiroc AB on January 19, 2024 and sell it today you would earn a total of  24.00  from holding Epiroc AB or generate 1.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Epiroc AB  vs.  Getlink SE

Epiroc AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Epiroc AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Epiroc AB may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Getlink SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Getlink SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Getlink SE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Epiroc AB and Getlink SE

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

The idea behind Epiroc AB and Getlink SE 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.