Correlation Between Eternit SA and Hrcules SA

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

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

Diversification Opportunities for Eternit SA and Hrcules SA

0.37

Correlation Coefficient

Eternit SA  Hrcules SA

Weak diversification

The 3 months correlation between Eternit and Hrcules is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Eternit SA and Hrcules SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hrcules SA and Eternit 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 Eternit SA are associated (or correlated) with Hrcules SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hrcules SA has no effect on the direction of Eternit SA i.e., Eternit SA and Hrcules SA go up and down completely randomly.

Pair Corralation between Eternit SA and Hrcules SA

Assuming the 90 days trading horizon Eternit SA is expected to generate 0.49 times more return on investment than Hrcules SA. However, Eternit SA is 2.04 times less risky than Hrcules SA. It trades about 0.07 of its potential returns per unit of risk. Hrcules SA is currently generating about -0.23 per unit of risk. If you would invest  505.00  in Eternit SA on October 26, 2024 and sell it today you would earn a total of  10.00  from holding Eternit SA or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Eternit SA  vs.  Hrcules SA

Eternit SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eternit SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eternit SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hrcules SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hrcules SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred 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 Eternit SA and Hrcules SA

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

The idea behind Eternit SA and Hrcules 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.