Correlation Between Esprinet SpA and INDO-RAMA SYNTHETIC

Can any of the company-specific risk be diversified away by investing in both Esprinet SpA and INDO-RAMA SYNTHETIC 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 Esprinet SpA and INDO-RAMA SYNTHETIC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Esprinet SpA and INDO RAMA SYNTHETIC, you can compare the effects of market volatilities on Esprinet SpA and INDO-RAMA SYNTHETIC 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 Esprinet SpA with a short position of INDO-RAMA SYNTHETIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Esprinet SpA and INDO-RAMA SYNTHETIC.

Diversification Opportunities for Esprinet SpA and INDO-RAMA SYNTHETIC

0.0

Correlation Coefficient

Esprinet SpA  INDO-RAMA SYNTHETIC

Pay attention - limited upside

The 3 months correlation between Esprinet and INDO-RAMA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Esprinet SpA and INDO RAMA SYNTHETIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDO RAMA SYNTHETIC and Esprinet SpA 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 Esprinet SpA are associated (or correlated) with INDO-RAMA SYNTHETIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDO RAMA SYNTHETIC has no effect on the direction of Esprinet SpA i.e., Esprinet SpA and INDO-RAMA SYNTHETIC go up and down completely randomly.

Pair Corralation between Esprinet SpA and INDO-RAMA SYNTHETIC

Assuming the 90 days trading horizon Esprinet SpA is expected to under-perform the INDO-RAMA SYNTHETIC. In addition to that, Esprinet SpA is 1.2 times more volatile than INDO RAMA SYNTHETIC. It trades about -0.02 of its total potential returns per unit of risk. INDO RAMA SYNTHETIC is currently generating about 0.04 per unit of volatility. If you would invest  18.00  in INDO RAMA SYNTHETIC on October 5, 2024 and sell it today you would earn a total of  3.00  from holding INDO RAMA SYNTHETIC or generate 16.67% return on investment over 90 days.

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

Esprinet SpA  vs.  INDO RAMA SYNTHETIC

Esprinet SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esprinet SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

INDO RAMA SYNTHETIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDO RAMA SYNTHETIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, INDO-RAMA SYNTHETIC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Esprinet SpA and INDO-RAMA SYNTHETIC

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

The idea behind Esprinet SpA and INDO RAMA SYNTHETIC 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.