Correlation Between Entech SE and Compagnie Industrielle

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

Diversification Opportunities for Entech SE and Compagnie Industrielle

-0.53

Correlation Coefficient

Entech SE  Compagnie Industrielle

Excellent diversification

The 3 months correlation between Entech and Compagnie is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Entech SE SAS and Compagnie Industrielle et in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Industrielle 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 Compagnie Industrielle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Industrielle has no effect on the direction of Entech SE i.e., Entech SE and Compagnie Industrielle go up and down completely randomly.

Pair Corralation between Entech SE and Compagnie Industrielle

Assuming the 90 days trading horizon Entech SE SAS is expected to generate 1.68 times more return on investment than Compagnie Industrielle. However, Entech SE is 1.68 times more volatile than Compagnie Industrielle et. It trades about 0.22 of its potential returns per unit of risk. Compagnie Industrielle et is currently generating about -0.06 per unit of risk. If you would invest  506.00  in Entech SE SAS on December 4, 2024 and sell it today you would earn a total of  278.00  from holding Entech SE SAS or generate 54.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Entech SE SAS  vs.  Compagnie Industrielle et

Entech SE SAS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Entech SE SAS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Entech SE reported solid returns over the last few months and may actually be approaching a breakup point.

Compagnie Industrielle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compagnie Industrielle et has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Entech SE and Compagnie Industrielle

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

The idea behind Entech SE SAS and Compagnie Industrielle et 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.