Correlation Between Ekinops SA and Tonnellerie Francois

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

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

Diversification Opportunities for Ekinops SA and Tonnellerie Francois

0.71

Correlation Coefficient

Ekinops SA  Tonnellerie Francois

Poor diversification

The 3 months correlation between Ekinops and Tonnellerie is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ekinops SA and Tonnellerie Francois Freres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonnellerie Francois 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 Tonnellerie Francois. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tonnellerie Francois has no effect on the direction of Ekinops SA i.e., Ekinops SA and Tonnellerie Francois go up and down completely randomly.

Pair Corralation between Ekinops SA and Tonnellerie Francois

Assuming the 90 days trading horizon Ekinops SA is expected to under-perform the Tonnellerie Francois. In addition to that, Ekinops SA is 1.3 times more volatile than Tonnellerie Francois Freres. It trades about -0.16 of its total potential returns per unit of risk. Tonnellerie Francois Freres is currently generating about -0.11 per unit of volatility. If you would invest  3,060  in Tonnellerie Francois Freres on October 25, 2024 and sell it today you would lose (310.00) from holding Tonnellerie Francois Freres or give up 10.13% of portfolio value over 90 days.

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

Ekinops SA  vs.  Tonnellerie Francois Freres

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.

Tonnellerie Francois

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tonnellerie Francois Freres has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ekinops SA and Tonnellerie Francois

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

The idea behind Ekinops SA and Tonnellerie Francois Freres 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.