Correlation Between Edenred SA and SPIE SA

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

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

Diversification Opportunities for Edenred SA and SPIE SA

0.76

Correlation Coefficient

Edenred SA  SPIE SA

Poor diversification

The 3 months correlation between Edenred and SPIE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Edenred SA and SPIE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPIE SA and Edenred 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 Edenred SA are associated (or correlated) with SPIE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPIE SA has no effect on the direction of Edenred SA i.e., Edenred SA and SPIE SA go up and down completely randomly.

Pair Corralation between Edenred SA and SPIE SA

Assuming the 90 days trading horizon Edenred SA is expected to generate 1.73 times more return on investment than SPIE SA. However, Edenred SA is 1.73 times more volatile than SPIE SA. It trades about -0.08 of its potential returns per unit of risk. SPIE SA is currently generating about -0.18 per unit of risk. If you would invest  3,709  in Edenred SA on September 1, 2024 and sell it today you would lose (579.00) from holding Edenred SA or give up 15.61% of portfolio value over 90 days.

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

Edenred SA  vs.  SPIE SA

Edenred SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edenred 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 basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

SPIE SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPIE 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 basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Edenred SA and SPIE SA

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

The idea behind Edenred SA and SPIE 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.