Correlation Between Esker SA and Sword Group

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

Diversification Opportunities for Esker SA and Sword Group

0.59

Correlation Coefficient

Esker SA  Sword Group

Very weak diversification

The 3 months correlation between Esker and Sword is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and Sword Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sword Group SE 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 Sword Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sword Group SE has no effect on the direction of Esker SA i.e., Esker SA and Sword Group go up and down completely randomly.

Pair Corralation between Esker SA and Sword Group

Assuming the 90 days trading horizon Esker SA is expected to generate 1.23 times more return on investment than Sword Group. However, Esker SA is 1.23 times more volatile than Sword Group SE. It trades about 0.06 of its potential returns per unit of risk. Sword Group SE is currently generating about 0.0 per unit of risk. If you would invest  15,888  in Esker SA on September 28, 2024 and sell it today you would earn a total of  10,172  from holding Esker SA or generate 64.02% return on investment over 90 days.

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

Esker SA  vs.  Sword Group SE

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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Sword Group SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sword Group SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sword Group 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 Sword Group

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

The idea behind Esker SA and Sword Group SE 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.

Check out your portfolio center.

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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.