Correlation Between Stef SA and Ekinops SA

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

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

Diversification Opportunities for Stef SA and Ekinops SA

0.42

Correlation Coefficient

Stef SA  Ekinops SA

Very weak diversification

The 3 months correlation between Stef and Ekinops is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Ekinops SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekinops SA and Stef SA 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 Stef SA are associated (or correlated) with Ekinops SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekinops SA has no effect on the direction of Stef SA i.e., Stef SA and Ekinops SA go up and down completely randomly.

Pair Corralation between Stef SA and Ekinops SA

Assuming the 90 days trading horizon Stef SA is expected to generate 0.52 times more return on investment than Ekinops SA. However, Stef SA is 1.92 times less risky than Ekinops SA. It trades about -0.04 of its potential returns per unit of risk. Ekinops SA is currently generating about -0.07 per unit of risk. If you would invest  13,600  in Stef SA on September 12, 2024 and sell it today you would lose (500.00) from holding Stef SA or give up 3.68% of portfolio value over 90 days.

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

Stef SA  vs.  Ekinops SA

Stef SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ekinops SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekinops SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Stef SA and Ekinops SA

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

The idea behind Stef SA and Ekinops 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.