Correlation Between Elis SA and Mersen SA
Can any of the company-specific risk be diversified away by investing in both Elis SA and Mersen 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 Elis SA and Mersen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elis SA and Mersen SA, you can compare the effects of market volatilities on Elis SA and Mersen 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 Elis SA with a short position of Mersen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Mersen SA.
Diversification Opportunities for Elis SA and Mersen SA
Good diversification
The 3 months correlation between Elis and Mersen is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA and Mersen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mersen 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 Mersen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mersen SA has no effect on the direction of Elis SA i.e., Elis SA and Mersen SA go up and down completely randomly.
Pair Corralation between Elis SA and Mersen SA
Assuming the 90 days trading horizon Elis SA is expected to generate 0.84 times more return on investment than Mersen SA. However, Elis SA is 1.19 times less risky than Mersen SA. It trades about 0.03 of its potential returns per unit of risk. Mersen SA is currently generating about -0.1 per unit of risk. If you would invest 1,706 in Elis SA on August 29, 2024 and sell it today you would earn a total of 214.00 from holding Elis SA or generate 12.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elis SA vs. Mersen SA
Performance |
| Timeline |
| Elis SA |
| Mersen SA |
Elis SA and Mersen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elis SA and Mersen SA
The main advantage of trading using opposite Elis SA and Mersen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elis SA position performs unexpectedly, Mersen 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 Mersen SA will offset losses from the drop in Mersen SA's long position.The idea behind Elis SA and Mersen 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.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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |