Correlation Between Elior SCA and Eiffage SA

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

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

Diversification Opportunities for Elior SCA and Eiffage SA

0.26

Correlation Coefficient

Elior SCA  Eiffage SA

Modest diversification

The 3 months correlation between Elior and Eiffage is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Elior SCA and Eiffage SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA and Elior SCA 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 Elior SCA are associated (or correlated) with Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA has no effect on the direction of Elior SCA i.e., Elior SCA and Eiffage SA go up and down completely randomly.

Pair Corralation between Elior SCA and Eiffage SA

Assuming the 90 days trading horizon Elior SCA is expected to generate 1.97 times more return on investment than Eiffage SA. However, Elior SCA is 1.97 times more volatile than Eiffage SA. It trades about 0.11 of its potential returns per unit of risk. Eiffage SA is currently generating about -0.03 per unit of risk. If you would invest  259.00  in Elior SCA on September 28, 2024 and sell it today you would earn a total of  14.00  from holding Elior SCA or generate 5.41% return on investment over 90 days.

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

Elior SCA  vs.  Eiffage SA

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.

Eiffage SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eiffage SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eiffage SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elior SCA and Eiffage SA

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

The idea behind Elior SCA and Eiffage 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.