Correlation Between Chargeurs and Elior SCA

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

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

Diversification Opportunities for Chargeurs and Elior SCA

0.12

Correlation Coefficient

Chargeurs  Elior SCA

Average diversification

The 3 months correlation between Chargeurs and Elior is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chargeurs SA and Elior SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elior SCA and Chargeurs 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 Chargeurs SA 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 Chargeurs i.e., Chargeurs and Elior SCA go up and down completely randomly.

Pair Corralation between Chargeurs and Elior SCA

Assuming the 90 days trading horizon Chargeurs SA is expected to under-perform the Elior SCA. But the stock apears to be less risky and, when comparing its historical volatility, Chargeurs SA is 1.34 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chargeurs SA  vs.  Elior SCA

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chargeurs SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Chargeurs and Elior SCA

The main advantage of trading using opposite Chargeurs and Elior SCA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chargeurs 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 Chargeurs SA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.