Correlation Between Elton International and Lavipharm

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

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

Diversification Opportunities for Elton International and Lavipharm

-0.62

Correlation Coefficient

Elton International  Lavipharm

Excellent diversification

The 3 months correlation between Elton and Lavipharm is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Elton International Trading and Lavipharm SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavipharm SA and Elton International 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 Elton International Trading are associated (or correlated) with Lavipharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavipharm SA has no effect on the direction of Elton International i.e., Elton International and Lavipharm go up and down completely randomly.

Pair Corralation between Elton International and Lavipharm

Assuming the 90 days trading horizon Elton International Trading is expected to generate 0.86 times more return on investment than Lavipharm. However, Elton International Trading is 1.16 times less risky than Lavipharm. It trades about 0.12 of its potential returns per unit of risk. Lavipharm SA is currently generating about -0.02 per unit of risk. If you would invest  164.00  in Elton International Trading on September 12, 2024 and sell it today you would earn a total of  20.00  from holding Elton International Trading or generate 12.2% return on investment over 90 days.

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

Elton International Trading  vs.  Lavipharm SA

Elton International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elton International Trading are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elton International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lavipharm SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lavipharm SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lavipharm is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Elton International and Lavipharm

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

The idea behind Elton International Trading and Lavipharm 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 Global Correlations module to find global opportunities by holding instruments from different markets.