Correlation Between Essilor International and Premier Information

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

By analyzing existing cross correlation between Essilor International SA and Premier information Management, you can compare the effects of market volatilities on Essilor International and Premier Information 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 Essilor International with a short position of Premier Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essilor International and Premier Information.

Diversification Opportunities for Essilor International and Premier Information

-0.34

Correlation Coefficient

Essilor International  Premier Information

Very good diversification

The 3 months correlation between Essilor and Premier is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Essilor International SA and Premier information Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier information and Essilor International 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 Essilor International SA are associated (or correlated) with Premier Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier information has no effect on the direction of Essilor International i.e., Essilor International and Premier Information go up and down completely randomly.

Pair Corralation between Essilor International and Premier Information

Assuming the 90 days horizon Essilor International SA is expected to under-perform the Premier Information. But the pink sheet apears to be less risky and, when comparing its historical volatility, Essilor International SA is 4.1 times less risky than Premier Information. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Premier information Management is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.09  in Premier information Management on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Premier information Management or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Essilor International SA  vs.  Premier information Management

Essilor International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Essilor International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Premier information

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier information Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Premier Information reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Essilor International and Premier Information

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

The idea behind Essilor International SA and Premier information Management 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.