Correlation Between Compagnie and Esker SA

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

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

Diversification Opportunities for Compagnie and Esker SA

-0.37

Correlation Coefficient

Compagnie  Esker SA

Very good diversification

The 3 months correlation between Compagnie and Esker is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie du Cambodge and Esker SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esker SA and Compagnie 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 Compagnie du Cambodge are associated (or correlated) with Esker SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esker SA has no effect on the direction of Compagnie i.e., Compagnie and Esker SA go up and down completely randomly.

Pair Corralation between Compagnie and Esker SA

Assuming the 90 days trading horizon Compagnie du Cambodge is expected to generate 197.67 times more return on investment than Esker SA. However, Compagnie is 197.67 times more volatile than Esker SA. It trades about 0.33 of its potential returns per unit of risk. Esker SA is currently generating about 0.1 per unit of risk. If you would invest  765,000  in Compagnie du Cambodge on September 3, 2024 and sell it today you would lose (755,500) from holding Compagnie du Cambodge or give up 98.76% of portfolio value over 90 days.

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

Compagnie du Cambodge  vs.  Esker SA

Compagnie du Cambodge

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Esker SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Esker SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Esker SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Compagnie and Esker SA

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

The idea behind Compagnie du Cambodge and Esker 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.