Correlation Between EVS Broadcast and Laurent Perrier

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

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

Diversification Opportunities for EVS Broadcast and Laurent Perrier

-0.07

Correlation Coefficient

EVS Broadcast  Laurent Perrier

Good diversification

The 3 months correlation between EVS and Laurent is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Laurent Perrier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laurent Perrier and EVS Broadcast 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 EVS Broadcast Equipment are associated (or correlated) with Laurent Perrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laurent Perrier has no effect on the direction of EVS Broadcast i.e., EVS Broadcast and Laurent Perrier go up and down completely randomly.

Pair Corralation between EVS Broadcast and Laurent Perrier

Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 1.16 times more return on investment than Laurent Perrier. However, EVS Broadcast is 1.16 times more volatile than Laurent Perrier. It trades about 0.23 of its potential returns per unit of risk. Laurent Perrier is currently generating about -0.07 per unit of risk. If you would invest  3,095  in EVS Broadcast Equipment on December 20, 2024 and sell it today you would earn a total of  780.00  from holding EVS Broadcast Equipment or generate 25.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

EVS Broadcast Equipment  vs.  Laurent Perrier

EVS Broadcast Equipment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EVS Broadcast reported solid returns over the last few months and may actually be approaching a breakup point.

Laurent Perrier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laurent Perrier 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with EVS Broadcast and Laurent Perrier

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

The idea behind EVS Broadcast Equipment and Laurent Perrier 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.