Correlation Between EPC Groupe and Baikowski SASU

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

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

Diversification Opportunities for EPC Groupe and Baikowski SASU

-0.67

Correlation Coefficient

EPC Groupe  Baikowski SASU

Excellent diversification

The 3 months correlation between EPC and Baikowski is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding EPC Groupe and Baikowski SASU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baikowski SASU and EPC Groupe 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 EPC Groupe are associated (or correlated) with Baikowski SASU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baikowski SASU has no effect on the direction of EPC Groupe i.e., EPC Groupe and Baikowski SASU go up and down completely randomly.

Pair Corralation between EPC Groupe and Baikowski SASU

Assuming the 90 days trading horizon EPC Groupe is expected to generate 0.56 times more return on investment than Baikowski SASU. However, EPC Groupe is 1.8 times less risky than Baikowski SASU. It trades about 0.06 of its potential returns per unit of risk. Baikowski SASU is currently generating about -0.06 per unit of risk. If you would invest  18,200  in EPC Groupe on October 20, 2024 and sell it today you would earn a total of  900.00  from holding EPC Groupe or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

EPC Groupe  vs.  Baikowski SASU

EPC Groupe

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EPC Groupe are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, EPC Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baikowski SASU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baikowski SASU has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with EPC Groupe and Baikowski SASU

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

The idea behind EPC Groupe and Baikowski SASU 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.