Correlation Between Eutelsat Communications and Compagnie

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

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

Diversification Opportunities for Eutelsat Communications and Compagnie

0.24

Correlation Coefficient

Eutelsat Communications  Compagnie

Modest diversification

The 3 months correlation between Eutelsat and Compagnie is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Eutelsat Communications SA and Compagnie du Cambodge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Cambodge and Eutelsat Communications 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 Eutelsat Communications SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Cambodge has no effect on the direction of Eutelsat Communications i.e., Eutelsat Communications and Compagnie go up and down completely randomly.

Pair Corralation between Eutelsat Communications and Compagnie

Assuming the 90 days trading horizon Eutelsat Communications SA is expected to under-perform the Compagnie. But the stock apears to be less risky and, when comparing its historical volatility, Eutelsat Communications SA is 1.17 times less risky than Compagnie. The stock trades about -0.71 of its potential returns per unit of risk. The Compagnie du Cambodge is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  9,950  in Compagnie du Cambodge on October 11, 2024 and sell it today you would earn a total of  1,650  from holding Compagnie du Cambodge or generate 16.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eutelsat Communications SA  vs.  Compagnie du Cambodge

Eutelsat Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eutelsat Communications SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Compagnie du Cambodge

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eutelsat Communications and Compagnie

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

The idea behind Eutelsat Communications SA and Compagnie du Cambodge 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.