Correlation Between Esker SA and Lectra SA

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

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

Diversification Opportunities for Esker SA and Lectra SA

0.13

Correlation Coefficient

Esker SA  Lectra SA

Average diversification

The 3 months correlation between Esker and Lectra is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and Lectra SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lectra 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 Lectra SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lectra SA has no effect on the direction of Esker SA i.e., Esker SA and Lectra SA go up and down completely randomly.

Pair Corralation between Esker SA and Lectra SA

Assuming the 90 days trading horizon Esker SA is expected to generate 0.35 times more return on investment than Lectra SA. However, Esker SA is 2.83 times less risky than Lectra SA. It trades about 0.17 of its potential returns per unit of risk. Lectra SA is currently generating about 0.04 per unit of risk. If you would invest  26,100  in Esker SA on December 30, 2024 and sell it today you would earn a total of  1,640  from holding Esker SA or generate 6.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.23%
Values	Daily Returns

Esker SA  vs.  Lectra SA

Esker SA

Risk-Adjusted Performance

Good

Over the last 90 days Esker SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Esker SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lectra SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lectra SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lectra SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Esker SA and Lectra SA

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

The idea behind Esker SA and Lectra 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.