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 Ltd ADR 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

0.0

Correlation Coefficient

Ansell  Essilor International

Pay attention - limited upside

The 3 months correlation between Ansell and Essilor is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ansell Ltd ADR 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 Ltd ADR 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

If you would invest  12,131  in Essilor International SA on December 30, 2024 and sell it today you would earn a total of  2,293  from holding Essilor International SA or generate 18.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Ansell Ltd ADR  vs.  Essilor International SA

Ansell Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ansell Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Ansell is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Essilor International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Essilor International showed solid returns over the last few months and may actually be approaching a breakup point.

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 Ltd ADR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.