Correlation Between Amoeba SA and Encres Dubuit

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

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

Diversification Opportunities for Amoeba SA and Encres Dubuit

0.83

Correlation Coefficient

Amoeba SA  Encres Dubuit

Very poor diversification

The 3 months correlation between Amoeba and Encres is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amoeba 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 Amoeba 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 Amoeba 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 Amoeba SA i.e., Amoeba SA and Encres Dubuit go up and down completely randomly.

Pair Corralation between Amoeba SA and Encres Dubuit

Assuming the 90 days trading horizon Amoeba SA is expected to generate 1.18 times more return on investment than Encres Dubuit. However, Amoeba SA is 1.18 times more volatile than Encres Dubuit SA. It trades about 0.24 of its potential returns per unit of risk. Encres Dubuit SA is currently generating about 0.16 per unit of risk. If you would invest  50.00  in Amoeba SA on September 24, 2024 and sell it today you would earn a total of  40.00  from holding Amoeba SA or generate 80.0% return on investment over 90 days.

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

Amoeba SA  vs.  Encres Dubuit SA

Amoeba SA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amoeba SA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Amoeba SA reported solid returns over the last few months and may actually be approaching a breakup point.

Encres Dubuit SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Encres Dubuit SA are ranked lower than 12 (%) 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 Amoeba SA and Encres Dubuit

The main advantage of trading using opposite Amoeba SA and Encres Dubuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amoeba SA 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 Amoeba 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.