Correlation Between Intersport Polska and Esotiq Henderson

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

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

Diversification Opportunities for Intersport Polska and Esotiq Henderson

-0.01

Correlation Coefficient

Intersport Polska  Esotiq Henderson

Good diversification

The 3 months correlation between Intersport and Esotiq is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Intersport Polska SA and Esotiq Henderson SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esotiq Henderson and Intersport Polska 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 Intersport Polska SA are associated (or correlated) with Esotiq Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esotiq Henderson has no effect on the direction of Intersport Polska i.e., Intersport Polska and Esotiq Henderson go up and down completely randomly.

Pair Corralation between Intersport Polska and Esotiq Henderson

Assuming the 90 days trading horizon Intersport Polska SA is expected to generate 1.5 times more return on investment than Esotiq Henderson. However, Intersport Polska is 1.5 times more volatile than Esotiq Henderson SA. It trades about 0.04 of its potential returns per unit of risk. Esotiq Henderson SA is currently generating about 0.0 per unit of risk. If you would invest  63.00  in Intersport Polska SA on September 12, 2024 and sell it today you would earn a total of  4.00  from holding Intersport Polska SA or generate 6.35% return on investment over 90 days.

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

Intersport Polska SA  vs.  Esotiq Henderson SA

Intersport Polska

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intersport Polska SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intersport Polska reported solid returns over the last few months and may actually be approaching a breakup point.

Esotiq Henderson

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Esotiq Henderson SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Esotiq Henderson is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intersport Polska and Esotiq Henderson

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

The idea behind Intersport Polska SA and Esotiq Henderson 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..