Correlation Between Ecolab and SOCGEN

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

By analyzing existing cross correlation between Ecolab Inc and SOCGEN 4677 15 JUN 27, you can compare the effects of market volatilities on Ecolab and SOCGEN 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 Ecolab with a short position of SOCGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecolab and SOCGEN.

Diversification Opportunities for Ecolab and SOCGEN

-0.55

Correlation Coefficient

Ecolab  SOCGEN

Excellent diversification

The 3 months correlation between Ecolab and SOCGEN is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and SOCGEN 4677 15 JUN 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOCGEN 4677 15 and Ecolab 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 Ecolab Inc are associated (or correlated) with SOCGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOCGEN 4677 15 has no effect on the direction of Ecolab i.e., Ecolab and SOCGEN go up and down completely randomly.

Pair Corralation between Ecolab and SOCGEN

Considering the 90-day investment horizon Ecolab Inc is expected to generate 1.33 times more return on investment than SOCGEN. However, Ecolab is 1.33 times more volatile than SOCGEN 4677 15 JUN 27. It trades about 0.0 of its potential returns per unit of risk. SOCGEN 4677 15 JUN 27 is currently generating about -0.32 per unit of risk. If you would invest  25,046  in Ecolab Inc on September 17, 2024 and sell it today you would lose (123.00) from holding Ecolab Inc or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	20.0%
Values	Daily Returns

Ecolab Inc  vs.  SOCGEN 4677 15 JUN 27

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

SOCGEN 4677 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOCGEN 4677 15 JUN 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic 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 SOCGEN 4677 15 JUN 27 investors.

Pair Trading with Ecolab and SOCGEN

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

The idea behind Ecolab Inc and SOCGEN 4677 15 JUN 27 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.