Correlation Between Eiffage SA and Compagnie

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

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

Diversification Opportunities for Eiffage SA and Compagnie

0.35

Correlation Coefficient

Eiffage SA  Compagnie

Weak diversification

The 3 months correlation between Eiffage and Compagnie is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eiffage SA and Compagnie du Cambodge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Cambodge and Eiffage SA 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 Eiffage SA are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Cambodge has no effect on the direction of Eiffage SA i.e., Eiffage SA and Compagnie go up and down completely randomly.

Pair Corralation between Eiffage SA and Compagnie

Assuming the 90 days trading horizon Eiffage SA is expected to generate 0.89 times more return on investment than Compagnie. However, Eiffage SA is 1.12 times less risky than Compagnie. It trades about 0.2 of its potential returns per unit of risk. Compagnie du Cambodge is currently generating about -0.04 per unit of risk. If you would invest  8,338  in Eiffage SA on October 26, 2024 and sell it today you would earn a total of  272.00  from holding Eiffage SA or generate 3.26% return on investment over 90 days.

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

Eiffage SA  vs.  Compagnie du Cambodge

Eiffage SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eiffage SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eiffage SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Compagnie du Cambodge

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eiffage SA and Compagnie

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

The idea behind Eiffage SA and Compagnie du Cambodge 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.