Correlation Between Exail Technologies and Eutelsat Communications

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

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

Diversification Opportunities for Exail Technologies and Eutelsat Communications

0.65

Correlation Coefficient

Exail Technologies  Eutelsat Communications

Poor diversification

The 3 months correlation between Exail and Eutelsat is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Exail Technologies SA and Eutelsat Communications SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eutelsat Communications and Exail Technologies 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 Exail Technologies SA are associated (or correlated) with Eutelsat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eutelsat Communications has no effect on the direction of Exail Technologies i.e., Exail Technologies and Eutelsat Communications go up and down completely randomly.

Pair Corralation between Exail Technologies and Eutelsat Communications

Assuming the 90 days trading horizon Exail Technologies is expected to generate 1.86 times less return on investment than Eutelsat Communications. But when comparing it to its historical volatility, Exail Technologies SA is 5.68 times less risky than Eutelsat Communications. It trades about 0.35 of its potential returns per unit of risk. Eutelsat Communications SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  227.00  in Eutelsat Communications SA on December 30, 2024 and sell it today you would earn a total of  180.00  from holding Eutelsat Communications SA or generate 79.3% return on investment over 90 days.

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

Exail Technologies SA  vs.  Eutelsat Communications SA

Exail Technologies

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exail Technologies SA are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Exail Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Eutelsat Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eutelsat Communications SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Eutelsat Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exail Technologies and Eutelsat Communications

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

The idea behind Exail Technologies SA and Eutelsat Communications 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..