Correlation Between Eurobio Scientific and Encres Dubuit

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

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

Diversification Opportunities for Eurobio Scientific and Encres Dubuit

-0.02

Correlation Coefficient

Eurobio Scientific  Encres Dubuit

Good diversification

The 3 months correlation between Eurobio and Encres is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Eurobio Scientific SA and Encres Dubuit SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encres Dubuit SA and Eurobio Scientific 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 Eurobio Scientific SA are associated (or correlated) with Encres Dubuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encres Dubuit SA has no effect on the direction of Eurobio Scientific i.e., Eurobio Scientific and Encres Dubuit go up and down completely randomly.

Pair Corralation between Eurobio Scientific and Encres Dubuit

Assuming the 90 days trading horizon Eurobio Scientific is expected to generate 20.36 times less return on investment than Encres Dubuit. But when comparing it to its historical volatility, Eurobio Scientific SA is 2.84 times less risky than Encres Dubuit. It trades about 0.02 of its potential returns per unit of risk. Encres Dubuit SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  218.00  in Encres Dubuit SA on September 25, 2024 and sell it today you would earn a total of  64.00  from holding Encres Dubuit SA or generate 29.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Eurobio Scientific SA  vs.  Encres Dubuit SA

Eurobio Scientific

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobio Scientific SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Eurobio Scientific is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Encres Dubuit SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Encres Dubuit SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Encres Dubuit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eurobio Scientific and Encres Dubuit

The main advantage of trading using opposite Eurobio Scientific and Encres Dubuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurobio Scientific position performs unexpectedly, Encres Dubuit 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 Encres Dubuit will offset losses from the drop in Encres Dubuit's long position.

The idea behind Eurobio Scientific SA and Encres Dubuit 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.