Correlation Between Esker SA and ID Logistics

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

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

Diversification Opportunities for Esker SA and ID Logistics

0.85

Correlation Coefficient

Esker SA  ID Logistics

Very poor diversification

The 3 months correlation between Esker and IDL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and ID Logistics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ID Logistics Group 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 ID Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ID Logistics Group has no effect on the direction of Esker SA i.e., Esker SA and ID Logistics go up and down completely randomly.

Pair Corralation between Esker SA and ID Logistics

Assuming the 90 days trading horizon Esker SA is expected to generate 1.3 times less return on investment than ID Logistics. But when comparing it to its historical volatility, Esker SA is 1.98 times less risky than ID Logistics. It trades about 0.15 of its potential returns per unit of risk. ID Logistics Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  38,800  in ID Logistics Group on November 29, 2024 and sell it today you would earn a total of  3,100  from holding ID Logistics Group or generate 7.99% return on investment over 90 days.

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

Esker SA  vs.  ID Logistics Group

Esker SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esker SA are ranked lower than 11 (%) 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 March 2025.

ID Logistics Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ID Logistics Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, ID Logistics may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Esker SA and ID Logistics

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

The idea behind Esker SA and ID Logistics Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.