Correlation Between Ekinops SA and Eramet SA
Can any of the company-specific risk be diversified away by investing in both Ekinops SA and Eramet 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 Ekinops SA and Eramet SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ekinops SA and Eramet SA, you can compare the effects of market volatilities on Ekinops SA and Eramet 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 Ekinops SA with a short position of Eramet SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ekinops SA and Eramet SA.
Diversification Opportunities for Ekinops SA and Eramet SA
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ekinops and Eramet is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ekinops SA and Eramet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eramet SA and Ekinops 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 Ekinops SA are associated (or correlated) with Eramet SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eramet SA has no effect on the direction of Ekinops SA i.e., Ekinops SA and Eramet SA go up and down completely randomly.
Pair Corralation between Ekinops SA and Eramet SA
Assuming the 90 days trading horizon Ekinops SA is expected to under-perform the Eramet SA. But the stock apears to be less risky and, when comparing its historical volatility, Ekinops SA is 1.01 times less risky than Eramet SA. The stock trades about -0.25 of its potential returns per unit of risk. The Eramet SA is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 5,405 in Eramet SA on September 1, 2024 and sell it today you would lose (340.00) from holding Eramet SA or give up 6.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ekinops SA vs. Eramet SA
Performance |
| Timeline |
| Ekinops SA |
| Eramet SA |
Ekinops SA and Eramet SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ekinops SA and Eramet SA
The main advantage of trading using opposite Ekinops SA and Eramet SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ekinops SA position performs unexpectedly, Eramet 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 Eramet SA will offset losses from the drop in Eramet SA's long position.| Ekinops SA vs. Claranova SE | Ekinops SA vs. Derichebourg | Ekinops SA vs. Mersen SA | Ekinops SA vs. BigBen Interactive |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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