Correlation Between Ekinops SA and Sidetrade

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

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

Diversification Opportunities for Ekinops SA and Sidetrade

0.52

Correlation Coefficient

Ekinops SA  Sidetrade

Very weak diversification

The 3 months correlation between Ekinops and Sidetrade is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ekinops SA and Sidetrade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidetrade and Ekinops 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 Ekinops SA are associated (or correlated) with Sidetrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidetrade has no effect on the direction of Ekinops SA i.e., Ekinops SA and Sidetrade go up and down completely randomly.

Pair Corralation between Ekinops SA and Sidetrade

Assuming the 90 days trading horizon Ekinops SA is expected to generate 2.71 times less return on investment than Sidetrade. In addition to that, Ekinops SA is 1.28 times more volatile than Sidetrade. It trades about 0.02 of its total potential returns per unit of risk. Sidetrade is currently generating about 0.07 per unit of volatility. If you would invest  20,600  in Sidetrade on September 3, 2024 and sell it today you would earn a total of  1,800  from holding Sidetrade or generate 8.74% return on investment over 90 days.

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

Ekinops SA  vs.  Sidetrade

Ekinops SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ekinops SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Ekinops SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sidetrade

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sidetrade are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Sidetrade may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ekinops SA and Sidetrade

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

The idea behind Ekinops SA and Sidetrade 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.