Correlation Between ESGL Holdings and Cimpress

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

By analyzing existing cross correlation between ESGL Holdings Limited and Cimpress NV, you can compare the effects of market volatilities on ESGL Holdings and Cimpress 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 ESGL Holdings with a short position of Cimpress. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and Cimpress.

Diversification Opportunities for ESGL Holdings and Cimpress

-0.57

Correlation Coefficient

ESGL Holdings  Cimpress

Excellent diversification

The 3 months correlation between ESGL and Cimpress is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Cimpress go up and down completely randomly.

Pair Corralation between ESGL Holdings and Cimpress

Given the investment horizon of 90 days ESGL Holdings Limited is expected to generate 2.63 times more return on investment than Cimpress. However, ESGL Holdings is 2.63 times more volatile than Cimpress NV. It trades about 0.13 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.24 per unit of risk. If you would invest  133.00  in ESGL Holdings Limited on December 28, 2024 and sell it today you would earn a total of  71.90  from holding ESGL Holdings Limited or generate 54.06% return on investment over 90 days.

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

ESGL Holdings Limited  vs.  Cimpress NV

ESGL Holdings Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ESGL Holdings Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, ESGL Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cimpress NV

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ESGL Holdings and Cimpress

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

The idea behind ESGL Holdings Limited and Cimpress NV 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.