Correlation Between Broadpeak and Entech SE
Can any of the company-specific risk be diversified away by investing in both Broadpeak and Entech 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 Broadpeak and Entech SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadpeak SA and Entech SE SAS, you can compare the effects of market volatilities on Broadpeak and Entech 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 Broadpeak with a short position of Entech SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadpeak and Entech SE.
Diversification Opportunities for Broadpeak and Entech SE
Very poor diversification
The 3 months correlation between Broadpeak and Entech is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Broadpeak SA and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and Broadpeak 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 Broadpeak SA are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of Broadpeak i.e., Broadpeak and Entech SE go up and down completely randomly.
Pair Corralation between Broadpeak and Entech SE
Assuming the 90 days trading horizon Broadpeak SA is expected to under-perform the Entech SE. But the stock apears to be less risky and, when comparing its historical volatility, Broadpeak SA is 1.14 times less risky than Entech SE. The stock trades about -0.11 of its potential returns per unit of risk. The Entech SE SAS is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 947.00 in Entech SE SAS on September 19, 2024 and sell it today you would lose (343.00) from holding Entech SE SAS or give up 36.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadpeak SA vs. Entech SE SAS
Performance |
| Timeline |
| Broadpeak SA |
| Entech SE SAS |
Broadpeak and Entech SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadpeak and Entech SE
The main advantage of trading using opposite Broadpeak and Entech SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadpeak position performs unexpectedly, Entech 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 Entech SE will offset losses from the drop in Entech SE's long position.The idea behind Broadpeak SA and Entech SE SAS 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.| Entech SE vs. Voltalia SA | Entech SE vs. Waga Energy SA | Entech SE vs. Haffner Energy SA | Entech SE vs. OVH Groupe SAS |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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