Correlation Between Eutelsat Communications and Ubisoft Entertainment

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

Diversification Opportunities for Eutelsat Communications and Ubisoft Entertainment

0.52

Correlation Coefficient

Eutelsat Communications  Ubisoft Entertainment

Very weak diversification

The 3 months correlation between Eutelsat and Ubisoft is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Eutelsat Communications SA and Ubisoft Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment 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 Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of Eutelsat Communications i.e., Eutelsat Communications and Ubisoft Entertainment go up and down completely randomly.

Pair Corralation between Eutelsat Communications and Ubisoft Entertainment

Assuming the 90 days trading horizon Eutelsat Communications SA is expected to under-perform the Ubisoft Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Eutelsat Communications SA is 1.27 times less risky than Ubisoft Entertainment. The stock trades about -0.09 of its potential returns per unit of risk. The Ubisoft Entertainment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,921  in Ubisoft Entertainment on October 11, 2024 and sell it today you would lose (686.00) from holding Ubisoft Entertainment or give up 35.71% of portfolio value over 90 days.

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

Eutelsat Communications SA  vs.  Ubisoft Entertainment

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.

Ubisoft Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubisoft Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Ubisoft Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Eutelsat Communications and Ubisoft Entertainment

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

The idea behind Eutelsat Communications SA and Ubisoft Entertainment 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.