Correlation Between EPC Groupe and Compagnie Des

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Can any of the company-specific risk be diversified away by investing in both EPC Groupe and Compagnie Des 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 EPC Groupe and Compagnie Des into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPC Groupe and Compagnie des Eaux, you can compare the effects of market volatilities on EPC Groupe and Compagnie Des 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 EPC Groupe with a short position of Compagnie Des. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPC Groupe and Compagnie Des.

Diversification Opportunities for EPC Groupe and Compagnie Des

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between EPC and Compagnie is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding EPC Groupe and Compagnie des Eaux in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie des Eaux and EPC Groupe 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 EPC Groupe are associated (or correlated) with Compagnie Des. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie des Eaux has no effect on the direction of EPC Groupe i.e., EPC Groupe and Compagnie Des go up and down completely randomly.

Pair Corralation between EPC Groupe and Compagnie Des

Assuming the 90 days trading horizon EPC Groupe is expected to generate 1.91 times less return on investment than Compagnie Des. But when comparing it to its historical volatility, EPC Groupe is 1.35 times less risky than Compagnie Des. It trades about 0.07 of its potential returns per unit of risk. Compagnie des Eaux is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,780  in Compagnie des Eaux on September 14, 2024 and sell it today you would earn a total of  200.00  from holding Compagnie des Eaux or generate 4.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

EPC Groupe  vs.  Compagnie des Eaux

 Performance 
       Timeline  
EPC Groupe 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in EPC Groupe are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, EPC Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Compagnie des Eaux 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Compagnie des Eaux 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.

EPC Groupe and Compagnie Des Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EPC Groupe and Compagnie Des

The main advantage of trading using opposite EPC Groupe and Compagnie Des positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPC Groupe position performs unexpectedly, Compagnie Des 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 Compagnie Des will offset losses from the drop in Compagnie Des' long position.
The idea behind EPC Groupe and Compagnie des Eaux 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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