Correlation Between Entech SE and Metalliance

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

Diversification Opportunities for Entech SE and Metalliance

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Correlation Coefficient

Entech SE  Metalliance

Pay attention - limited upside

The 3 months correlation between Entech and Metalliance is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Entech SE SAS and Metalliance SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalliance SA 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 Metalliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalliance SA has no effect on the direction of Entech SE i.e., Entech SE and Metalliance go up and down completely randomly.

Pair Corralation between Entech SE and Metalliance

Assuming the 90 days trading horizon Entech SE SAS is expected to under-perform the Metalliance. But the stock apears to be less risky and, when comparing its historical volatility, Entech SE SAS is 1.13 times less risky than Metalliance. The stock trades about -0.01 of its potential returns per unit of risk. The Metalliance SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,310  in Metalliance SA on September 28, 2024 and sell it today you would lose (460.00) from holding Metalliance SA or give up 35.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.22%
Values	Daily Returns

Entech SE SAS  vs.  Metalliance SA

Entech SE SAS

Risk-Adjusted Performance

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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.

Metalliance SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Entech SE and Metalliance

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

The idea behind Entech SE SAS and Metalliance SA 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 Transaction History module to view history of all your transactions and understand their impact on performance.