Correlation Between EPC Groupe and Les Htels

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

By analyzing existing cross correlation between EPC Groupe and Les Htels de, you can compare the effects of market volatilities on EPC Groupe and Les Htels 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 Les Htels. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPC Groupe and Les Htels.

Diversification Opportunities for EPC Groupe and Les Htels

-0.15

Correlation Coefficient

EPC Groupe  Les Htels

Good diversification

The 3 months correlation between EPC and Les is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding EPC Groupe and Les Htels de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Les Htels de 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 Les Htels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Les Htels de has no effect on the direction of EPC Groupe i.e., EPC Groupe and Les Htels go up and down completely randomly.

Pair Corralation between EPC Groupe and Les Htels

Assuming the 90 days trading horizon EPC Groupe is expected to generate 0.48 times more return on investment than Les Htels. However, EPC Groupe is 2.1 times less risky than Les Htels. It trades about 0.1 of its potential returns per unit of risk. Les Htels de is currently generating about -0.05 per unit of risk. If you would invest  11,219  in EPC Groupe on September 16, 2024 and sell it today you would earn a total of  7,581  from holding EPC Groupe or generate 67.57% 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.  Les Htels de

EPC Groupe

Risk-Adjusted Performance

2 of 100

Weak

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.

Les Htels de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Les Htels de has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EPC Groupe and Les Htels

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

The idea behind EPC Groupe and Les Htels de 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.