Correlation Between Eve Holding and Thales SA

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

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

Diversification Opportunities for Eve Holding and Thales SA

-0.92

Correlation Coefficient

Eve Holding  Thales SA

Pay attention - limited upside

The 3 months correlation between Eve and Thales is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA and Eve Holding 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 Eve Holding are associated (or correlated) with Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of Eve Holding i.e., Eve Holding and Thales SA go up and down completely randomly.

Pair Corralation between Eve Holding and Thales SA

Given the investment horizon of 90 days Eve Holding is expected to under-perform the Thales SA. In addition to that, Eve Holding is 1.55 times more volatile than Thales SA. It trades about 0.0 of its total potential returns per unit of risk. Thales SA is currently generating about 0.03 per unit of volatility. If you would invest  12,450  in Thales SA on September 29, 2024 and sell it today you would earn a total of  1,725  from holding Thales SA or generate 13.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	68.75%
Values	Daily Returns

Eve Holding  vs.  Thales SA

Eve Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Thales SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thales SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Eve Holding and Thales SA

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

The idea behind Eve Holding and Thales 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.