Correlation Between Esker SA and Wallix Group

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

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

Diversification Opportunities for Esker SA and Wallix Group

-0.72

Correlation Coefficient

Esker SA  Wallix Group

Pay attention - limited upside

The 3 months correlation between Esker and Wallix is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and Wallix Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallix Group 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 Wallix Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallix Group SA has no effect on the direction of Esker SA i.e., Esker SA and Wallix Group go up and down completely randomly.

Pair Corralation between Esker SA and Wallix Group

Assuming the 90 days trading horizon Esker SA is expected to generate 25.23 times less return on investment than Wallix Group. But when comparing it to its historical volatility, Esker SA is 8.13 times less risky than Wallix Group. It trades about 0.12 of its potential returns per unit of risk. Wallix Group SA is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  931.00  in Wallix Group SA on October 8, 2024 and sell it today you would earn a total of  55.00  from holding Wallix Group SA or generate 5.91% return on investment over 90 days.

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

Esker SA  vs.  Wallix Group SA

Esker SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wallix Group SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wallix Group SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Wallix Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esker SA and Wallix Group

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

The idea behind Esker SA and Wallix Group 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.