Correlation Between Ekinops SA and Eurazeo

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

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

Diversification Opportunities for Ekinops SA and Eurazeo

0.3

Correlation Coefficient

Ekinops SA  Eurazeo

Weak diversification

The 3 months correlation between Ekinops and Eurazeo is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ekinops SA and Eurazeo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurazeo 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 Eurazeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurazeo has no effect on the direction of Ekinops SA i.e., Ekinops SA and Eurazeo go up and down completely randomly.

Pair Corralation between Ekinops SA and Eurazeo

Assuming the 90 days trading horizon Ekinops SA is expected to under-perform the Eurazeo. In addition to that, Ekinops SA is 1.75 times more volatile than Eurazeo. It trades about -0.05 of its total potential returns per unit of risk. Eurazeo is currently generating about 0.03 per unit of volatility. If you would invest  6,061  in Eurazeo on October 5, 2024 and sell it today you would earn a total of  1,194  from holding Eurazeo or generate 19.7% return on investment over 90 days.

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

Ekinops SA  vs.  Eurazeo

Ekinops SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ekinops SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Ekinops SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Eurazeo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eurazeo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eurazeo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ekinops SA and Eurazeo

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

The idea behind Ekinops SA and Eurazeo 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.