Correlation Between EVS Broadcast and Cofina SGPS

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

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

Diversification Opportunities for EVS Broadcast and Cofina SGPS

-0.37

Correlation Coefficient

EVS Broadcast  Cofina SGPS

Very good diversification

The 3 months correlation between EVS and Cofina is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Cofina SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cofina SGPS SA and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with Cofina SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cofina SGPS SA has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and Cofina SGPS go up and down completely randomly.

Pair Corralation between EVS Broadcast and Cofina SGPS

Assuming the 90 days trading horizon EVS Broadcast is expected to generate 27.59 times less return on investment than Cofina SGPS. But when comparing it to its historical volatility, EVS Broadcast Equipment is 16.21 times less risky than Cofina SGPS. It trades about 0.04 of its potential returns per unit of risk. Cofina SGPS SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,595  in Cofina SGPS SA on October 25, 2024 and sell it today you would lose (45.00) from holding Cofina SGPS SA or give up 2.82% of portfolio value over 90 days.

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

EVS Broadcast Equipment  vs.  Cofina SGPS SA

EVS Broadcast Equipment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cofina SGPS SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with EVS Broadcast and Cofina SGPS

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

The idea behind EVS Broadcast Equipment and Cofina SGPS 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.