Correlation Between EPC Groupe and Groupe Sfpi

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

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

Diversification Opportunities for EPC Groupe and Groupe Sfpi

-0.21

Correlation Coefficient

EPC Groupe  Groupe Sfpi

Very good diversification

The 3 months correlation between EPC and Groupe is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding EPC Groupe and Groupe Sfpi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Sfpi 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 Groupe Sfpi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Sfpi has no effect on the direction of EPC Groupe i.e., EPC Groupe and Groupe Sfpi go up and down completely randomly.

Pair Corralation between EPC Groupe and Groupe Sfpi

Assuming the 90 days trading horizon EPC Groupe is expected to generate 1.73 times less return on investment than Groupe Sfpi. In addition to that, EPC Groupe is 1.34 times more volatile than Groupe Sfpi. It trades about 0.03 of its total potential returns per unit of risk. Groupe Sfpi is currently generating about 0.07 per unit of volatility. If you would invest  189.00  in Groupe Sfpi on September 14, 2024 and sell it today you would earn a total of  13.00  from holding Groupe Sfpi or generate 6.88% 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.  Groupe Sfpi

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.

Groupe Sfpi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Sfpi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Groupe Sfpi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with EPC Groupe and Groupe Sfpi

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

The idea behind EPC Groupe and Groupe Sfpi 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.