Correlation Between Esker SA and Dear Cashmere

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

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

Diversification Opportunities for Esker SA and Dear Cashmere

0.18

Correlation Coefficient

Esker SA  Dear Cashmere

Average diversification

The 3 months correlation between Esker and Dear is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Esker SA and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding and Esker 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 Esker SA are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of Esker SA i.e., Esker SA and Dear Cashmere go up and down completely randomly.

Pair Corralation between Esker SA and Dear Cashmere

If you would invest  15.00  in Dear Cashmere Holding on September 13, 2024 and sell it today you would earn a total of  2.00  from holding Dear Cashmere Holding or generate 13.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Esker SA  vs.  Dear Cashmere Holding

Esker SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esker SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Esker SA reported solid returns over the last few months and may actually be approaching a breakup point.

Dear Cashmere Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dear Cashmere Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Dear Cashmere reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Esker SA and Dear Cashmere

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

The idea behind Esker SA and Dear Cashmere Holding 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..