Correlation Between Esker SA and Wedia SA
Can any of the company-specific risk be diversified away by investing in both Esker SA and Wedia SA 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 Esker SA and Wedia SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Esker SA and Wedia SA, you can compare the effects of market volatilities on Esker SA and Wedia SA 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 Esker SA with a short position of Wedia SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esker SA and Wedia SA.
Diversification Opportunities for Esker SA and Wedia SA
Modest diversification
The 3 months correlation between Esker and Wedia is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and Wedia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wedia SA and Esker SA 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 Esker SA are associated (or correlated) with Wedia SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wedia SA has no effect on the direction of Esker SA i.e., Esker SA and Wedia SA go up and down completely randomly.
Pair Corralation between Esker SA and Wedia SA
Assuming the 90 days trading horizon Esker SA is expected to generate 1.17 times more return on investment than Wedia SA. However, Esker SA is 1.17 times more volatile than Wedia SA. It trades about 0.13 of its potential returns per unit of risk. Wedia SA is currently generating about 0.11 per unit of risk. If you would invest 19,340 in Esker SA on August 24, 2024 and sell it today you would earn a total of 6,660 from holding Esker SA or generate 34.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Esker SA vs. Wedia SA
Performance |
| Timeline |
| Esker SA |
| Wedia SA |
Esker SA and Wedia SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Esker SA and Wedia SA
The main advantage of trading using opposite Esker SA and Wedia SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Esker SA position performs unexpectedly, Wedia SA 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 Wedia SA will offset losses from the drop in Wedia SA's long position.| Esker SA vs. Sartorius Stedim Biotech | Esker SA vs. Lectra SA | Esker SA vs. Teleperformance SE | Esker SA vs. Trigano SA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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