Correlation Between Agripower France and Ecoslops

Can any of the company-specific risk be diversified away by investing in both Agripower France 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 Agripower France and Ecoslops into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agripower France Sa and Ecoslops SA, you can compare the effects of market volatilities on Agripower France 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 Agripower France with a short position of Ecoslops. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agripower France and Ecoslops.

Diversification Opportunities for Agripower France and Ecoslops

0.75

Correlation Coefficient

Agripower France  Ecoslops

Poor diversification

The 3 months correlation between Agripower and Ecoslops is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Agripower France Sa and Ecoslops SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoslops SA and Agripower France 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 Agripower France 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 Agripower France i.e., Agripower France and Ecoslops go up and down completely randomly.

Pair Corralation between Agripower France and Ecoslops

Assuming the 90 days trading horizon Agripower France Sa is expected to generate 0.87 times more return on investment than Ecoslops. However, Agripower France Sa is 1.15 times less risky than Ecoslops. It trades about -0.14 of its potential returns per unit of risk. Ecoslops SA is currently generating about -0.18 per unit of risk. If you would invest  90.00  in Agripower France Sa on September 25, 2024 and sell it today you would lose (10.00) from holding Agripower France Sa or give up 11.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Agripower France Sa  vs.  Ecoslops SA

Agripower France

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agripower France Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Ecoslops SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecoslops SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Agripower France and Ecoslops

The main advantage of trading using opposite Agripower France and Ecoslops positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agripower France 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 Agripower France 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.