Correlation Between EPC Groupe and NSE SA

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

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

Diversification Opportunities for EPC Groupe and NSE SA

-0.3

Correlation Coefficient

EPC Groupe  NSE SA

Very good diversification

The 3 months correlation between EPC and NSE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding EPC Groupe and NSE SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSE SA 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 NSE SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSE SA has no effect on the direction of EPC Groupe i.e., EPC Groupe and NSE SA go up and down completely randomly.

Pair Corralation between EPC Groupe and NSE SA

Assuming the 90 days trading horizon EPC Groupe is expected to generate 1.2 times more return on investment than NSE SA. However, EPC Groupe is 1.2 times more volatile than NSE SA. It trades about 0.09 of its potential returns per unit of risk. NSE SA is currently generating about 0.06 per unit of risk. If you would invest  8,886  in EPC Groupe on September 14, 2024 and sell it today you would earn a total of  10,014  from holding EPC Groupe or generate 112.69% return on investment over 90 days.

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

EPC Groupe  vs.  NSE SA

EPC Groupe

Risk-Adjusted Performance

2 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EPC Groupe are ranked lower than 2 (%) 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.

NSE SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NSE SA 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 NSE SA

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

The idea behind EPC Groupe and NSE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.