Correlation Between Easy Software and LOral SA

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

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

Diversification Opportunities for Easy Software and LOral SA

-0.13

Correlation Coefficient

Easy Software  LOral SA

Good diversification

The 3 months correlation between Easy and LOral is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and LOral SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOral SA and Easy Software 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 Easy Software AG are associated (or correlated) with LOral SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOral SA has no effect on the direction of Easy Software i.e., Easy Software and LOral SA go up and down completely randomly.

Pair Corralation between Easy Software and LOral SA

Assuming the 90 days trading horizon Easy Software AG is expected to generate 3.63 times more return on investment than LOral SA. However, Easy Software is 3.63 times more volatile than LOral SA. It trades about 0.27 of its potential returns per unit of risk. LOral SA is currently generating about -0.21 per unit of risk. If you would invest  1,520  in Easy Software AG on October 10, 2024 and sell it today you would earn a total of  280.00  from holding Easy Software AG or generate 18.42% return on investment over 90 days.

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

Easy Software AG  vs.  LOral SA

Easy Software AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

LOral SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOral SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Easy Software and LOral SA

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

The idea behind Easy Software AG and LOral SA 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.