Correlation Between Dromeas SA and Ekter SA

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

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

Diversification Opportunities for Dromeas SA and Ekter SA

0.76

Correlation Coefficient

Dromeas SA  Ekter SA

Poor diversification

The 3 months correlation between Dromeas and Ekter is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dromeas SA and Ekter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekter SA and Dromeas SA 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 Dromeas SA are associated (or correlated) with Ekter SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekter SA has no effect on the direction of Dromeas SA i.e., Dromeas SA and Ekter SA go up and down completely randomly.

Pair Corralation between Dromeas SA and Ekter SA

Assuming the 90 days trading horizon Dromeas SA is expected to generate 0.97 times more return on investment than Ekter SA. However, Dromeas SA is 1.03 times less risky than Ekter SA. It trades about 0.18 of its potential returns per unit of risk. Ekter SA is currently generating about 0.14 per unit of risk. If you would invest  28.00  in Dromeas SA on October 25, 2024 and sell it today you would earn a total of  9.00  from holding Dromeas SA or generate 32.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Dromeas SA  vs.  Ekter SA

Dromeas SA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dromeas SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dromeas SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Ekter SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ekter SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ekter SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dromeas SA and Ekter SA

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

The idea behind Dromeas SA and Ekter 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.

Check out your portfolio center.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.