Correlation Between Essilor International and Tevano Systems

Can any of the company-specific risk be diversified away by investing in both Essilor International and Tevano Systems 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 Tevano Systems 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 Tevano Systems Holdings, you can compare the effects of market volatilities on Essilor International and Tevano Systems 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 Tevano Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essilor International and Tevano Systems.

Diversification Opportunities for Essilor International and Tevano Systems

-0.66

Correlation Coefficient

Essilor International  Tevano Systems

Excellent diversification

The 3 months correlation between Essilor and Tevano is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Essilor International SA and Tevano Systems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tevano Systems Holdings 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 Tevano Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tevano Systems Holdings has no effect on the direction of Essilor International i.e., Essilor International and Tevano Systems go up and down completely randomly.

Pair Corralation between Essilor International and Tevano Systems

If you would invest  0.00  in Tevano Systems Holdings on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Tevano Systems Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Essilor International SA  vs.  Tevano Systems Holdings

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Tevano Systems Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tevano Systems Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Essilor International and Tevano Systems

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

The idea behind Essilor International SA and Tevano Systems Holdings 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 CEOs Directory module to screen CEOs from public companies around the world.