Correlation Between Elis SA and Interparfums
Can any of the company-specific risk be diversified away by investing in both Elis SA and Interparfums 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 Elis SA and Interparfums into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elis SA and Interparfums SA, you can compare the effects of market volatilities on Elis SA and Interparfums 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 Elis SA with a short position of Interparfums. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Interparfums.
Diversification Opportunities for Elis SA and Interparfums
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Elis and Interparfums is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA and Interparfums SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interparfums SA and Elis 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 Elis SA are associated (or correlated) with Interparfums. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interparfums SA has no effect on the direction of Elis SA i.e., Elis SA and Interparfums go up and down completely randomly.
Pair Corralation between Elis SA and Interparfums
Assuming the 90 days trading horizon Elis SA is expected to under-perform the Interparfums. But the stock apears to be less risky and, when comparing its historical volatility, Elis SA is 1.16 times less risky than Interparfums. The stock trades about -0.23 of its potential returns per unit of risk. The Interparfums SA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 4,190 in Interparfums SA on September 1, 2024 and sell it today you would lose (235.00) from holding Interparfums SA or give up 5.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elis SA vs. Interparfums SA
Performance |
| Timeline |
| Elis SA |
| Interparfums SA |
Elis SA and Interparfums Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elis SA and Interparfums
The main advantage of trading using opposite Elis SA and Interparfums positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elis SA position performs unexpectedly, Interparfums 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 Interparfums will offset losses from the drop in Interparfums' long position.The idea behind Elis SA and Interparfums SA 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.| Interparfums vs. Remy Cointreau | Interparfums vs. Alten SA | Interparfums vs. Gaztransport Technigaz SAS | Interparfums 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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