Correlation Between FreelanceCom and Edenred SA

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

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

Diversification Opportunities for FreelanceCom and Edenred SA

-0.29

Correlation Coefficient

FreelanceCom  Edenred SA

Very good diversification

The 3 months correlation between FreelanceCom and Edenred is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FreelanceCom and Edenred SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edenred SA and FreelanceCom 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 FreelanceCom are associated (or correlated) with Edenred SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edenred SA has no effect on the direction of FreelanceCom i.e., FreelanceCom and Edenred SA go up and down completely randomly.

Pair Corralation between FreelanceCom and Edenred SA

Assuming the 90 days trading horizon FreelanceCom is expected to generate 1.38 times more return on investment than Edenred SA. However, FreelanceCom is 1.38 times more volatile than Edenred SA. It trades about 0.02 of its potential returns per unit of risk. Edenred SA is currently generating about -0.01 per unit of risk. If you would invest  262.00  in FreelanceCom on December 1, 2024 and sell it today you would earn a total of  3.00  from holding FreelanceCom or generate 1.15% return on investment over 90 days.

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

FreelanceCom  vs.  Edenred SA

FreelanceCom

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FreelanceCom are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FreelanceCom is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Edenred SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Edenred SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Edenred 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 FreelanceCom and Edenred SA

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

The idea behind FreelanceCom and Edenred 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.