Correlation Between Baikowski SASU and EPC Groupe

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

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

Diversification Opportunities for Baikowski SASU and EPC Groupe

-0.42

Correlation Coefficient

Baikowski SASU  EPC Groupe

Very good diversification

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

Pair Corralation between Baikowski SASU and EPC Groupe

Assuming the 90 days trading horizon Baikowski SASU is expected to under-perform the EPC Groupe. But the stock apears to be less risky and, when comparing its historical volatility, Baikowski SASU is 1.18 times less risky than EPC Groupe. The stock trades about -0.09 of its potential returns per unit of risk. The EPC Groupe is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  16,050  in EPC Groupe on September 13, 2024 and sell it today you would earn a total of  2,950  from holding EPC Groupe or generate 18.38% return on investment over 90 days.

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

Baikowski SASU  vs.  EPC Groupe

Baikowski SASU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baikowski SASU has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

EPC Groupe

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EPC Groupe are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EPC Groupe sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baikowski SASU and EPC Groupe

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

The idea behind Baikowski SASU and EPC Groupe 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.