Correlation Between Encres Dubuit and Afyren SAS

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

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

Diversification Opportunities for Encres Dubuit and Afyren SAS

0.64

Correlation Coefficient

Encres Dubuit  Afyren SAS

Poor diversification

The 3 months correlation between Encres and Afyren is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Encres Dubuit SA and Afyren SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afyren SAS and Encres Dubuit 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 Encres Dubuit SA are associated (or correlated) with Afyren SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afyren SAS has no effect on the direction of Encres Dubuit i.e., Encres Dubuit and Afyren SAS go up and down completely randomly.

Pair Corralation between Encres Dubuit and Afyren SAS

Assuming the 90 days trading horizon Encres Dubuit SA is expected to generate 0.36 times more return on investment than Afyren SAS. However, Encres Dubuit SA is 2.76 times less risky than Afyren SAS. It trades about -0.06 of its potential returns per unit of risk. Afyren SAS is currently generating about -0.09 per unit of risk. If you would invest  284.00  in Encres Dubuit SA on November 29, 2024 and sell it today you would lose (20.00) from holding Encres Dubuit SA or give up 7.04% of portfolio value over 90 days.

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

Encres Dubuit SA  vs.  Afyren SAS

Encres Dubuit SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Encres Dubuit SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Afyren SAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Afyren SAS 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 March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Encres Dubuit and Afyren SAS

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

The idea behind Encres Dubuit SA and Afyren SAS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .