Correlation Between Dromeas SA and EL D

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

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

Diversification Opportunities for Dromeas SA and EL D

-0.39

Correlation Coefficient

Dromeas SA  EL D

Very good diversification

The 3 months correlation between Dromeas and MOYZK is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dromeas SA and EL D Mouzakis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EL D Mouzakis 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 EL D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EL D Mouzakis has no effect on the direction of Dromeas SA i.e., Dromeas SA and EL D go up and down completely randomly.

Pair Corralation between Dromeas SA and EL D

Assuming the 90 days trading horizon Dromeas SA is expected to generate 1.16 times more return on investment than EL D. However, Dromeas SA is 1.16 times more volatile than EL D Mouzakis. It trades about 0.13 of its potential returns per unit of risk. EL D Mouzakis is currently generating about -0.04 per unit of risk. If you would invest  28.00  in Dromeas SA on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Dromeas SA or generate 17.86% return on investment over 90 days.

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

Dromeas SA  vs.  EL D Mouzakis

Dromeas SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dromeas SA are ranked lower than 10 (%) 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.

EL D Mouzakis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EL D Mouzakis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EL D is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dromeas SA and EL D

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

The idea behind Dromeas SA and EL D Mouzakis 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.