Correlation Between Entech SE and Icape Holding

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

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

Diversification Opportunities for Entech SE and Icape Holding

0.64

Correlation Coefficient

Entech SE  Icape Holding

Poor diversification

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

Pair Corralation between Entech SE and Icape Holding

Assuming the 90 days trading horizon Entech SE SAS is expected to under-perform the Icape Holding. In addition to that, Entech SE is 1.08 times more volatile than Icape Holding. It trades about -0.01 of its total potential returns per unit of risk. Icape Holding is currently generating about 0.03 per unit of volatility. If you would invest  914.00  in Icape Holding on October 9, 2024 and sell it today you would earn a total of  24.00  from holding Icape Holding or generate 2.63% return on investment over 90 days.

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

Entech SE SAS  vs.  Icape Holding

Entech SE SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entech SE SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Entech SE is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Icape Holding

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Icape Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Icape Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Entech SE and Icape Holding

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

The idea behind Entech SE SAS and Icape Holding 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..