Correlation Between Esker SA and Groupe Guillin

Can any of the company-specific risk be diversified away by investing in both Esker SA and Groupe Guillin 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 Esker SA and Groupe Guillin into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Esker SA and Groupe Guillin

-0.3

Correlation Coefficient

Esker SA  Groupe Guillin

Very good diversification

The 3 months correlation between Esker and Groupe is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and Groupe Guillin SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Guillin SA and Esker SA 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 Esker SA are associated (or correlated) with Groupe Guillin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Guillin SA has no effect on the direction of Esker SA i.e., Esker SA and Groupe Guillin go up and down completely randomly.

Pair Corralation between Esker SA and Groupe Guillin

Assuming the 90 days trading horizon Esker SA is expected to generate 1.34 times more return on investment than Groupe Guillin. However, Esker SA is 1.34 times more volatile than Groupe Guillin SA. It trades about 0.07 of its potential returns per unit of risk. Groupe Guillin SA is currently generating about -0.06 per unit of risk. If you would invest  24,300  in Esker SA on September 13, 2024 and sell it today you would earn a total of  1,700  from holding Esker SA or generate 7.0% return on investment over 90 days.

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

Esker SA  vs.  Groupe Guillin SA

Esker SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Esker SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Esker SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Groupe Guillin SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Esker SA and Groupe Guillin

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

The idea behind Esker SA and Groupe Guillin 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.