Correlation Between Eurofins Scientific and Coface SA

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

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

Diversification Opportunities for Eurofins Scientific and Coface SA

0.32

Correlation Coefficient

Eurofins Scientific  Coface SA

Weak diversification

The 3 months correlation between Eurofins and Coface is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eurofins Scientific SE and Coface SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coface SA and Eurofins Scientific 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 Eurofins Scientific SE are associated (or correlated) with Coface SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coface SA has no effect on the direction of Eurofins Scientific i.e., Eurofins Scientific and Coface SA go up and down completely randomly.

Pair Corralation between Eurofins Scientific and Coface SA

Assuming the 90 days trading horizon Eurofins Scientific is expected to generate 8.76 times less return on investment than Coface SA. In addition to that, Eurofins Scientific is 2.1 times more volatile than Coface SA. It trades about 0.02 of its total potential returns per unit of risk. Coface SA is currently generating about 0.35 per unit of volatility. If you would invest  1,438  in Coface SA on December 31, 2024 and sell it today you would earn a total of  337.00  from holding Coface SA or generate 23.44% return on investment over 90 days.

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

Eurofins Scientific SE  vs.  Coface SA

Eurofins Scientific

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eurofins Scientific SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Eurofins Scientific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Coface SA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Coface SA are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coface SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eurofins Scientific and Coface SA

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

The idea behind Eurofins Scientific SE and Coface 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.