Correlation Between Commercial Vehicle and Elis SA

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

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

Diversification Opportunities for Commercial Vehicle and Elis SA

0.62

Correlation Coefficient

Commercial Vehicle  Elis SA

Poor diversification

The 3 months correlation between Commercial and Elis is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA and Commercial Vehicle 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 Commercial Vehicle Group are associated (or correlated) with Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and Elis SA go up and down completely randomly.

Pair Corralation between Commercial Vehicle and Elis SA

Assuming the 90 days trading horizon Commercial Vehicle Group is expected to generate 2.39 times more return on investment than Elis SA. However, Commercial Vehicle is 2.39 times more volatile than Elis SA. It trades about -0.03 of its potential returns per unit of risk. Elis SA is currently generating about -0.12 per unit of risk. If you would invest  222.00  in Commercial Vehicle Group on October 10, 2024 and sell it today you would lose (6.00) from holding Commercial Vehicle Group or give up 2.7% of portfolio value over 90 days.

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

Commercial Vehicle Group  vs.  Elis SA

Commercial Vehicle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial Vehicle Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Elis SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elis SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Commercial Vehicle and Elis SA

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

The idea behind Commercial Vehicle Group and Elis 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.