Correlation Between Eramet SA and Ecoslops
Can any of the company-specific risk be diversified away by investing in both Eramet SA and Ecoslops 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 Eramet SA and Ecoslops into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eramet SA and Ecoslops SA, you can compare the effects of market volatilities on Eramet SA and Ecoslops 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 Eramet SA with a short position of Ecoslops. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eramet SA and Ecoslops.
Diversification Opportunities for Eramet SA and Ecoslops
Very weak diversification
The 3 months correlation between Eramet and Ecoslops is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eramet SA and Ecoslops SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoslops SA and Eramet 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 Eramet SA are associated (or correlated) with Ecoslops. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoslops SA has no effect on the direction of Eramet SA i.e., Eramet SA and Ecoslops go up and down completely randomly.
Pair Corralation between Eramet SA and Ecoslops
Assuming the 90 days trading horizon Eramet SA is expected to under-perform the Ecoslops. But the stock apears to be less risky and, when comparing its historical volatility, Eramet SA is 1.49 times less risky than Ecoslops. The stock trades about -0.27 of its potential returns per unit of risk. The Ecoslops SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Ecoslops SA on September 5, 2024 and sell it today you would lose (3.00) from holding Ecoslops SA or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eramet SA vs. Ecoslops SA
Performance |
| Timeline |
| Eramet SA |
| Ecoslops SA |
Eramet SA and Ecoslops Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eramet SA and Ecoslops
The main advantage of trading using opposite Eramet SA and Ecoslops positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eramet SA position performs unexpectedly, Ecoslops 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 Ecoslops will offset losses from the drop in Ecoslops' long position.The idea behind Eramet SA and Ecoslops 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |