Correlation Between Este Lauder and Hrcules SA

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

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

Diversification Opportunities for Este Lauder and Hrcules SA

0.21

Correlation Coefficient

Este Lauder  Hrcules SA

Modest diversification

The 3 months correlation between Este and Hrcules is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Este Lauder and Hrcules SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrcules SA and Este Lauder 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 The Este Lauder are associated (or correlated) with Hrcules SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrcules SA has no effect on the direction of Este Lauder i.e., Este Lauder and Hrcules SA go up and down completely randomly.

Pair Corralation between Este Lauder and Hrcules SA

Assuming the 90 days trading horizon The Este Lauder is expected to generate 0.94 times more return on investment than Hrcules SA. However, The Este Lauder is 1.07 times less risky than Hrcules SA. It trades about 0.53 of its potential returns per unit of risk. Hrcules SA is currently generating about -0.02 per unit of risk. If you would invest  1,533  in The Este Lauder on September 16, 2024 and sell it today you would earn a total of  517.00  from holding The Este Lauder or generate 33.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

The Este Lauder  vs.  Hrcules SA

Este Lauder

Risk-Adjusted Performance

3 of 100

Insignificant

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

Hrcules SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hrcules SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hrcules SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Este Lauder and Hrcules SA

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

The idea behind The Este Lauder and Hrcules 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.