Correlation Between Elis SA and Tonnellerie Francois
Can any of the company-specific risk be diversified away by investing in both Elis SA and Tonnellerie Francois 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 Tonnellerie Francois into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elis SA and Tonnellerie Francois Freres, you can compare the effects of market volatilities on Elis SA and Tonnellerie Francois 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 Tonnellerie Francois. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Tonnellerie Francois.
Diversification Opportunities for Elis SA and Tonnellerie Francois
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Elis and Tonnellerie is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA and Tonnellerie Francois Freres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonnellerie Francois 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 Tonnellerie Francois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tonnellerie Francois has no effect on the direction of Elis SA i.e., Elis SA and Tonnellerie Francois go up and down completely randomly.
Pair Corralation between Elis SA and Tonnellerie Francois
Assuming the 90 days trading horizon Elis SA is expected to generate 1.07 times more return on investment than Tonnellerie Francois. However, Elis SA is 1.07 times more volatile than Tonnellerie Francois Freres. It trades about 0.03 of its potential returns per unit of risk. Tonnellerie Francois Freres is currently generating about -0.04 per unit of risk. If you would invest 1,703 in Elis SA on August 30, 2024 and sell it today you would earn a total of 217.00 from holding Elis SA or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elis SA vs. Tonnellerie Francois Freres
Performance |
| Timeline |
| Elis SA |
| Tonnellerie Francois |
Elis SA and Tonnellerie Francois Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elis SA and Tonnellerie Francois
The main advantage of trading using opposite Elis SA and Tonnellerie Francois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elis SA position performs unexpectedly, Tonnellerie Francois 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 Tonnellerie Francois will offset losses from the drop in Tonnellerie Francois' long position.The idea behind Elis SA and Tonnellerie Francois Freres 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.| Tonnellerie Francois vs. Neurones | Tonnellerie Francois vs. Aubay Socit Anonyme | Tonnellerie Francois vs. Infotel SA | Tonnellerie Francois vs. Manitou BF 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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