Correlation Between Elior SCA and Tarkett SA

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

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

Diversification Opportunities for Elior SCA and Tarkett SA

-0.21

Correlation Coefficient

Elior SCA  Tarkett SA

Very good diversification

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

Pair Corralation between Elior SCA and Tarkett SA

Assuming the 90 days trading horizon Elior SCA is expected to under-perform the Tarkett SA. In addition to that, Elior SCA is 1.73 times more volatile than Tarkett SA. It trades about -0.17 of its total potential returns per unit of risk. Tarkett SA is currently generating about 0.11 per unit of volatility. If you would invest  994.00  in Tarkett SA on October 20, 2024 and sell it today you would earn a total of  146.00  from holding Tarkett SA or generate 14.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Elior SCA  vs.  Tarkett SA

Elior SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elior SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Tarkett SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tarkett SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tarkett SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elior SCA and Tarkett SA

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

The idea behind Elior SCA and Tarkett 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.