Correlation Between Duo World and Esker SA

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

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

Diversification Opportunities for Duo World and Esker SA

-0.16

Correlation Coefficient

Duo World  Esker SA

Good diversification

The 3 months correlation between Duo and Esker is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Duo World and Esker SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esker SA and Duo World 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 Duo World are associated (or correlated) with Esker SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esker SA has no effect on the direction of Duo World i.e., Duo World and Esker SA go up and down completely randomly.

Pair Corralation between Duo World and Esker SA

Given the investment horizon of 90 days Duo World is expected to under-perform the Esker SA. In addition to that, Duo World is 5.0 times more volatile than Esker SA. It trades about -0.13 of its total potential returns per unit of risk. Esker SA is currently generating about -0.1 per unit of volatility. If you would invest  29,892  in Esker SA on December 27, 2024 and sell it today you would lose (1,857) from holding Esker SA or give up 6.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.02%
Values	Daily Returns

Duo World  vs.  Esker SA

Duo World

Risk-Adjusted Performance

Very Weak

Over the last 90 days Duo World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Esker SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esker SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Duo World and Esker SA

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

The idea behind Duo World and Esker 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.