Correlation Between Eldorado Gold and Sapiens International

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

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

Diversification Opportunities for Eldorado Gold and Sapiens International

0.66

Correlation Coefficient

Eldorado Gold  Sapiens International

Poor diversification

The 3 months correlation between Eldorado and Sapiens is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Eldorado Gold Corp and Sapiens International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapiens International and Eldorado Gold 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 Eldorado Gold Corp are associated (or correlated) with Sapiens International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapiens International has no effect on the direction of Eldorado Gold i.e., Eldorado Gold and Sapiens International go up and down completely randomly.

Pair Corralation between Eldorado Gold and Sapiens International

Considering the 90-day investment horizon Eldorado Gold Corp is expected to generate 1.1 times more return on investment than Sapiens International. However, Eldorado Gold is 1.1 times more volatile than Sapiens International. It trades about 0.07 of its potential returns per unit of risk. Sapiens International is currently generating about 0.05 per unit of risk. If you would invest  833.00  in Eldorado Gold Corp on September 3, 2024 and sell it today you would earn a total of  767.00  from holding Eldorado Gold Corp or generate 92.08% return on investment over 90 days.

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

Eldorado Gold Corp  vs.  Sapiens International

Eldorado Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldorado Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Eldorado Gold is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Eldorado Gold and Sapiens International

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

The idea behind Eldorado Gold Corp and Sapiens International 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.