Correlation Between Hopium SAS and Entech SE

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

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

Diversification Opportunities for Hopium SAS and Entech SE

0.64

Correlation Coefficient

Hopium SAS  Entech SE

Poor diversification

The 3 months correlation between Hopium and Entech is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hopium SAS and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and Hopium SAS 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 Hopium SAS are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of Hopium SAS i.e., Hopium SAS and Entech SE go up and down completely randomly.

Pair Corralation between Hopium SAS and Entech SE

Assuming the 90 days trading horizon Hopium SAS is expected to under-perform the Entech SE. In addition to that, Hopium SAS is 1.51 times more volatile than Entech SE SAS. It trades about -0.38 of its total potential returns per unit of risk. Entech SE SAS is currently generating about 0.23 per unit of volatility. If you would invest  480.00  in Entech SE SAS on September 28, 2024 and sell it today you would earn a total of  108.00  from holding Entech SE SAS or generate 22.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Hopium SAS  vs.  Entech SE SAS

Hopium SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hopium SAS 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Entech SE SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entech SE SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Hopium SAS and Entech SE

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

The idea behind Hopium SAS and Entech SE SAS 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.