Correlation Between Entech SE and Elior SCA

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

By analyzing existing cross correlation between Entech SE SAS and Elior SCA, you can compare the effects of market volatilities on Entech SE and Elior SCA 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 Entech SE with a short position of Elior SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entech SE and Elior SCA.

Diversification Opportunities for Entech SE and Elior SCA

0.2

Correlation Coefficient

Entech SE  Elior SCA

Modest diversification

The 3 months correlation between Entech and Elior is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Entech SE SAS and Elior SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elior SCA and Entech SE 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 Entech SE SAS are associated (or correlated) with Elior SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elior SCA has no effect on the direction of Entech SE i.e., Entech SE and Elior SCA go up and down completely randomly.

Pair Corralation between Entech SE and Elior SCA

Assuming the 90 days trading horizon Entech SE SAS is expected to under-perform the Elior SCA. But the stock apears to be less risky and, when comparing its historical volatility, Entech SE SAS is 1.1 times less risky than Elior SCA. The stock trades about -0.02 of its potential returns per unit of risk. The Elior SCA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  388.00  in Elior SCA on September 29, 2024 and sell it today you would lose (115.00) from holding Elior SCA or give up 29.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Entech SE SAS  vs.  Elior SCA

Entech SE SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entech SE SAS 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.

Elior SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elior SCA 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.

Pair Trading with Entech SE and Elior SCA

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

The idea behind Entech SE SAS and Elior SCA 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.