Correlation Between Europlasma and Eutelsat Communications

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

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

Diversification Opportunities for Europlasma and Eutelsat Communications

-0.03

Correlation Coefficient

Europlasma  Eutelsat Communications

Good diversification

The 3 months correlation between Europlasma and Eutelsat is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Europlasma SA and Eutelsat Communications SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eutelsat Communications and Europlasma 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 Europlasma SA are associated (or correlated) with Eutelsat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eutelsat Communications has no effect on the direction of Europlasma i.e., Europlasma and Eutelsat Communications go up and down completely randomly.

Pair Corralation between Europlasma and Eutelsat Communications

Assuming the 90 days trading horizon Europlasma SA is expected to under-perform the Eutelsat Communications. But the stock apears to be less risky and, when comparing its historical volatility, Europlasma SA is 1.36 times less risky than Eutelsat Communications. The stock trades about -0.04 of its potential returns per unit of risk. The Eutelsat Communications SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Eutelsat Communications SA on December 25, 2024 and sell it today you would earn a total of  164.00  from holding Eutelsat Communications SA or generate 73.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Europlasma SA  vs.  Eutelsat Communications SA

Europlasma SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Europlasma SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Eutelsat Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eutelsat Communications SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Eutelsat Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Europlasma and Eutelsat Communications

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

The idea behind Europlasma SA and Eutelsat Communications 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.