Correlation Between Essilor International and Tevano Systems
Can any of the company-specific risk be diversified away by investing in both Essilor International and Tevano Systems 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 Essilor International and Tevano Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essilor International SA and Tevano Systems Holdings, you can compare the effects of market volatilities on Essilor International and Tevano Systems 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 Essilor International with a short position of Tevano Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essilor International and Tevano Systems.
Diversification Opportunities for Essilor International and Tevano Systems
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Essilor and Tevano is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Essilor International SA and Tevano Systems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tevano Systems Holdings and Essilor International 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 Essilor International SA are associated (or correlated) with Tevano Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tevano Systems Holdings has no effect on the direction of Essilor International i.e., Essilor International and Tevano Systems go up and down completely randomly.
Pair Corralation between Essilor International and Tevano Systems
Assuming the 90 days horizon Essilor International SA is expected to generate 0.05 times more return on investment than Tevano Systems. However, Essilor International SA is 18.46 times less risky than Tevano Systems. It trades about 0.15 of its potential returns per unit of risk. Tevano Systems Holdings is currently generating about -0.22 per unit of risk. If you would invest 11,689 in Essilor International SA on September 1, 2024 and sell it today you would earn a total of 445.00 from holding Essilor International SA or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Essilor International SA vs. Tevano Systems Holdings
Performance |
| Timeline |
| Essilor International |
| Tevano Systems Holdings |
Essilor International and Tevano Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essilor International and Tevano Systems
The main advantage of trading using opposite Essilor International and Tevano Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essilor International position performs unexpectedly, Tevano Systems 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 Tevano Systems will offset losses from the drop in Tevano Systems' long position.| Essilor International vs. Sysmex Corp | Essilor International vs. Straumann Holding AG | Essilor International vs. Coloplast AS | Essilor International vs. EssilorLuxottica Socit anonyme |
| Tevano Systems vs. Sysmex Corp | Tevano Systems vs. Coloplast AS | Tevano Systems vs. Essilor International SA | Tevano Systems vs. Coloplast A |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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