Correlation Between Ecotel Communication and Prosafe SE

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

By analyzing existing cross correlation between ecotel communication ag and Prosafe SE, you can compare the effects of market volatilities on Ecotel Communication and Prosafe SE 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 Ecotel Communication with a short position of Prosafe SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecotel Communication and Prosafe SE.

Diversification Opportunities for Ecotel Communication and Prosafe SE

-0.34

Correlation Coefficient

Ecotel Communication  Prosafe SE

Very good diversification

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

Pair Corralation between Ecotel Communication and Prosafe SE

Assuming the 90 days trading horizon Ecotel Communication is expected to generate 127.78 times less return on investment than Prosafe SE. But when comparing it to its historical volatility, ecotel communication ag is 14.52 times less risky than Prosafe SE. It trades about 0.0 of its potential returns per unit of risk. Prosafe SE is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  172.00  in Prosafe SE on October 26, 2024 and sell it today you would lose (88.00) from holding Prosafe SE or give up 51.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ecotel communication ag  vs.  Prosafe SE

ecotel communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ecotel communication ag has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Ecotel Communication is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Prosafe SE

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Prosafe SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecotel Communication and Prosafe SE

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

The idea behind ecotel communication ag and Prosafe SE 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.