Correlation Between Essentra Plc and Semperit Aktiengesellscha

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

By analyzing existing cross correlation between Essentra plc and Semperit Aktiengesellschaft Holding, you can compare the effects of market volatilities on Essentra Plc and Semperit Aktiengesellscha 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 Essentra Plc with a short position of Semperit Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essentra Plc and Semperit Aktiengesellscha.

Diversification Opportunities for Essentra Plc and Semperit Aktiengesellscha

0.44

Correlation Coefficient

Essentra Plc  Semperit Aktiengesellscha

Very weak diversification

The 3 months correlation between Essentra and Semperit is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Essentra plc and Semperit Aktiengesellschaft Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semperit Aktiengesellscha and Essentra Plc 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 Essentra plc are associated (or correlated) with Semperit Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semperit Aktiengesellscha has no effect on the direction of Essentra Plc i.e., Essentra Plc and Semperit Aktiengesellscha go up and down completely randomly.

Pair Corralation between Essentra Plc and Semperit Aktiengesellscha

Assuming the 90 days horizon Essentra plc is expected to under-perform the Semperit Aktiengesellscha. In addition to that, Essentra Plc is 1.19 times more volatile than Semperit Aktiengesellschaft Holding. It trades about 0.0 of its total potential returns per unit of risk. Semperit Aktiengesellschaft Holding is currently generating about 0.0 per unit of volatility. If you would invest  1,305  in Semperit Aktiengesellschaft Holding on September 6, 2024 and sell it today you would lose (167.00) from holding Semperit Aktiengesellschaft Holding or give up 12.8% of portfolio value over 90 days.

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

Essentra plc  vs.  Semperit Aktiengesellschaft Ho

Essentra plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Essentra plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Semperit Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Semperit Aktiengesellschaft Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Semperit Aktiengesellscha is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Essentra Plc and Semperit Aktiengesellscha

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

The idea behind Essentra plc and Semperit Aktiengesellschaft Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.