Correlation Between ESSILORLUXOTTICA and MEDIPAL HOLDINGS

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

By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and MEDIPAL HOLDINGS P, you can compare the effects of market volatilities on ESSILORLUXOTTICA and MEDIPAL HOLDINGS 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 ESSILORLUXOTTICA with a short position of MEDIPAL HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and MEDIPAL HOLDINGS.

Diversification Opportunities for ESSILORLUXOTTICA and MEDIPAL HOLDINGS

-0.07

Correlation Coefficient

ESSILORLUXOTTICA  MEDIPAL HOLDINGS

Good diversification

The 3 months correlation between ESSILORLUXOTTICA and MEDIPAL is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and MEDIPAL HOLDINGS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDIPAL HOLDINGS P and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON are associated (or correlated) with MEDIPAL HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDIPAL HOLDINGS P has no effect on the direction of ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and MEDIPAL HOLDINGS go up and down completely randomly.

Pair Corralation between ESSILORLUXOTTICA and MEDIPAL HOLDINGS

Assuming the 90 days trading horizon ESSILORLUXOTTICA 12ON is expected to generate 0.91 times more return on investment than MEDIPAL HOLDINGS. However, ESSILORLUXOTTICA 12ON is 1.1 times less risky than MEDIPAL HOLDINGS. It trades about 0.06 of its potential returns per unit of risk. MEDIPAL HOLDINGS P is currently generating about 0.03 per unit of risk. If you would invest  8,210  in ESSILORLUXOTTICA 12ON on October 11, 2024 and sell it today you would earn a total of  3,390  from holding ESSILORLUXOTTICA 12ON or generate 41.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

ESSILORLUXOTTICA 12ON  vs.  MEDIPAL HOLDINGS P

ESSILORLUXOTTICA 12ON

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ESSILORLUXOTTICA 12ON are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, ESSILORLUXOTTICA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

MEDIPAL HOLDINGS P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDIPAL HOLDINGS P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ESSILORLUXOTTICA and MEDIPAL HOLDINGS

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

The idea behind ESSILORLUXOTTICA 12ON and MEDIPAL HOLDINGS P 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.