Correlation Between Ekinops SA and Eutelsat Communications

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

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

Diversification Opportunities for Ekinops SA and Eutelsat Communications

0.79

Correlation Coefficient

Ekinops SA  Eutelsat Communications

Poor diversification

The 3 months correlation between Ekinops and Eutelsat is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ekinops SA and Eutelsat Communications SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eutelsat Communications and Ekinops 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 Ekinops SA are associated (or correlated) with Eutelsat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eutelsat Communications has no effect on the direction of Ekinops SA i.e., Ekinops SA and Eutelsat Communications go up and down completely randomly.

Pair Corralation between Ekinops SA and Eutelsat Communications

Assuming the 90 days trading horizon Ekinops SA is expected to under-perform the Eutelsat Communications. In addition to that, Ekinops SA is 1.17 times more volatile than Eutelsat Communications SA. It trades about -0.17 of its total potential returns per unit of risk. Eutelsat Communications SA is currently generating about -0.05 per unit of volatility. If you would invest  229.00  in Eutelsat Communications SA on October 22, 2024 and sell it today you would lose (6.00) from holding Eutelsat Communications SA or give up 2.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Ekinops SA  vs.  Eutelsat Communications SA

Ekinops SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekinops SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Eutelsat Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eutelsat Communications SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ekinops SA and Eutelsat Communications

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

The idea behind Ekinops SA and Eutelsat Communications 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 Stocks Directory module to find actively traded stocks across global markets.