Correlation Between Esotiq Henderson and Comp SA

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

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

Diversification Opportunities for Esotiq Henderson and Comp SA

-0.91

Correlation Coefficient

Esotiq Henderson  Comp SA

Pay attention - limited upside

The 3 months correlation between Esotiq and Comp is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Esotiq Henderson SA and Comp SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comp SA and Esotiq Henderson 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 Esotiq Henderson SA are associated (or correlated) with Comp SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comp SA has no effect on the direction of Esotiq Henderson i.e., Esotiq Henderson and Comp SA go up and down completely randomly.

Pair Corralation between Esotiq Henderson and Comp SA

Assuming the 90 days trading horizon Esotiq Henderson SA is expected to under-perform the Comp SA. In addition to that, Esotiq Henderson is 1.47 times more volatile than Comp SA. It trades about -0.11 of its total potential returns per unit of risk. Comp SA is currently generating about 0.25 per unit of volatility. If you would invest  10,800  in Comp SA on October 22, 2024 and sell it today you would earn a total of  3,400  from holding Comp SA or generate 31.48% return on investment over 90 days.

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

Esotiq Henderson SA  vs.  Comp SA

Esotiq Henderson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esotiq Henderson SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Comp SA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comp SA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Comp SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esotiq Henderson and Comp SA

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

The idea behind Esotiq Henderson SA and Comp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.