Correlation Between Elis SA and RELO GROUP

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

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

Diversification Opportunities for Elis SA and RELO GROUP

-0.4

Correlation Coefficient

Elis SA  RELO GROUP

Very good diversification

The 3 months correlation between Elis and RELO is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA and RELO GROUP INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELO GROUP INC and Elis 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 Elis SA are associated (or correlated) with RELO GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELO GROUP INC has no effect on the direction of Elis SA i.e., Elis SA and RELO GROUP go up and down completely randomly.

Pair Corralation between Elis SA and RELO GROUP

Assuming the 90 days horizon Elis SA is expected to under-perform the RELO GROUP. But the stock apears to be less risky and, when comparing its historical volatility, Elis SA is 1.11 times less risky than RELO GROUP. The stock trades about -0.05 of its potential returns per unit of risk. The RELO GROUP INC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  985.00  in RELO GROUP INC on September 23, 2024 and sell it today you would earn a total of  175.00  from holding RELO GROUP INC or generate 17.77% return on investment over 90 days.

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

Elis SA  vs.  RELO GROUP INC

Elis SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

RELO GROUP INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RELO GROUP INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, RELO GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Elis SA and RELO GROUP

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

The idea behind Elis SA and RELO GROUP INC 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..