Correlation Between Ekinops SA and Vicat SA

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

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

Diversification Opportunities for Ekinops SA and Vicat SA

0.47

Correlation Coefficient

Ekinops SA  Vicat SA

Very weak diversification

The 3 months correlation between Ekinops and Vicat is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ekinops SA and Vicat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicat SA 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 Vicat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicat SA has no effect on the direction of Ekinops SA i.e., Ekinops SA and Vicat SA go up and down completely randomly.

Pair Corralation between Ekinops SA and Vicat SA

Assuming the 90 days trading horizon Ekinops SA is expected to generate 5.02 times less return on investment than Vicat SA. In addition to that, Ekinops SA is 1.29 times more volatile than Vicat SA. It trades about 0.04 of its total potential returns per unit of risk. Vicat SA is currently generating about 0.27 per unit of volatility. If you would invest  3,615  in Vicat SA on December 30, 2024 and sell it today you would earn a total of  1,495  from holding Vicat SA or generate 41.36% return on investment over 90 days.

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

Ekinops SA  vs.  Vicat SA

Ekinops SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ekinops SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Ekinops SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vicat SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vicat SA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vicat SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ekinops SA and Vicat SA

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

The idea behind Ekinops SA and Vicat 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.