Correlation Between Entech SE and Union Technologies

Can any of the company-specific risk be diversified away by investing in both Entech SE and Union Technologies 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 Union Technologies 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 Union Technologies Informatique, you can compare the effects of market volatilities on Entech SE and Union Technologies 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 Union Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entech SE and Union Technologies.

Diversification Opportunities for Entech SE and Union Technologies

-0.52

Correlation Coefficient

Entech SE  Union Technologies

Excellent diversification

The 3 months correlation between Entech and Union is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Entech SE SAS and Union Technologies Informatiqu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Technologies 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 Union Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Technologies has no effect on the direction of Entech SE i.e., Entech SE and Union Technologies go up and down completely randomly.

Pair Corralation between Entech SE and Union Technologies

Assuming the 90 days trading horizon Entech SE SAS is expected to generate 0.91 times more return on investment than Union Technologies. However, Entech SE SAS is 1.1 times less risky than Union Technologies. It trades about -0.01 of its potential returns per unit of risk. Union Technologies Informatique is currently generating about -0.03 per unit of risk. If you would invest  958.00  in Entech SE SAS on September 28, 2024 and sell it today you would lose (368.00) from holding Entech SE SAS or give up 38.41% of portfolio value over 90 days.

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

Entech SE SAS  vs.  Union Technologies Informatiqu

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 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.

Union Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Technologies Informatique has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Union Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Entech SE and Union Technologies

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

The idea behind Entech SE SAS and Union Technologies Informatique 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.