Correlation Between Ansell and Essilor International

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

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

Diversification Opportunities for Ansell and Essilor International

0.34

Correlation Coefficient

Ansell  Essilor International

Weak diversification

The 3 months correlation between Ansell and Essilor is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ansell Limited and Essilor International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essilor International and Ansell 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 Ansell Limited are associated (or correlated) with Essilor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essilor International has no effect on the direction of Ansell i.e., Ansell and Essilor International go up and down completely randomly.

Pair Corralation between Ansell and Essilor International

Assuming the 90 days horizon Ansell Limited is expected to generate 1.52 times more return on investment than Essilor International. However, Ansell is 1.52 times more volatile than Essilor International SA. It trades about 0.12 of its potential returns per unit of risk. Essilor International SA is currently generating about 0.07 per unit of risk. If you would invest  1,844  in Ansell Limited on September 12, 2024 and sell it today you would earn a total of  236.00  from holding Ansell Limited or generate 12.8% return on investment over 90 days.

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

Ansell Limited  vs.  Essilor International SA

Ansell Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ansell Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Ansell reported solid returns over the last few months and may actually be approaching a breakup point.

Essilor International

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Essilor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ansell and Essilor International

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

The idea behind Ansell Limited and Essilor International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.