Correlation Between Elis SA and Tonnellerie Francois

Can any of the company-specific risk be diversified away by investing in both Elis 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 Elis 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 Elis SA and Tonnellerie Francois Freres, you can compare the effects of market volatilities on Elis 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 Elis SA with a short position of Tonnellerie Francois. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Tonnellerie Francois.

Diversification Opportunities for Elis SA and Tonnellerie Francois

0.16

Correlation Coefficient

Elis SA  Tonnellerie Francois

Average diversification

The 3 months correlation between Elis and Tonnellerie is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Elis 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 Elis 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 Elis 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 Elis SA i.e., Elis SA and Tonnellerie Francois go up and down completely randomly.

Pair Corralation between Elis SA and Tonnellerie Francois

Assuming the 90 days trading horizon Elis SA is expected to under-perform the Tonnellerie Francois. But the stock apears to be less risky and, when comparing its historical volatility, Elis SA is 1.96 times less risky than Tonnellerie Francois. The stock trades about -0.23 of its potential returns per unit of risk. The Tonnellerie Francois Freres is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  3,060  in Tonnellerie Francois Freres on September 24, 2024 and sell it today you would lose (180.00) from holding Tonnellerie Francois Freres or give up 5.88% of portfolio value over 90 days.

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

Elis SA  vs.  Tonnellerie Francois Freres

Elis SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Elis SA and Tonnellerie Francois

The main advantage of trading using opposite Elis SA and Tonnellerie Francois positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elis 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 Elis 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.