Correlation Between Eiffage SA and Compagnie Industrielle

Can any of the company-specific risk be diversified away by investing in both Eiffage SA and Compagnie Industrielle 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 Industrielle 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 Industrielle et, you can compare the effects of market volatilities on Eiffage SA and Compagnie Industrielle 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 Industrielle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eiffage SA and Compagnie Industrielle.

Diversification Opportunities for Eiffage SA and Compagnie Industrielle

-0.6

Correlation Coefficient

Eiffage SA  Compagnie Industrielle

Excellent diversification

The 3 months correlation between Eiffage and Compagnie is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eiffage SA and Compagnie Industrielle et in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Industrielle 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 Industrielle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Industrielle has no effect on the direction of Eiffage SA i.e., Eiffage SA and Compagnie Industrielle go up and down completely randomly.

Pair Corralation between Eiffage SA and Compagnie Industrielle

Assuming the 90 days trading horizon Eiffage SA is expected to generate 0.58 times more return on investment than Compagnie Industrielle. However, Eiffage SA is 1.73 times less risky than Compagnie Industrielle. It trades about 0.18 of its potential returns per unit of risk. Compagnie Industrielle et is currently generating about -0.06 per unit of risk. If you would invest  8,518  in Eiffage SA on December 4, 2024 and sell it today you would earn a total of  1,162  from holding Eiffage SA or generate 13.64% return on investment over 90 days.

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

Eiffage SA  vs.  Compagnie Industrielle et

Eiffage SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eiffage SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eiffage SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Compagnie Industrielle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compagnie Industrielle et has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Eiffage SA and Compagnie Industrielle

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

The idea behind Eiffage SA and Compagnie Industrielle et 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.