Correlation Between Eiffage SA and Tlverbier

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

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

Diversification Opportunities for Eiffage SA and Tlverbier

0.44

Correlation Coefficient

Eiffage SA  Tlverbier

Very weak diversification

The 3 months correlation between Eiffage and Tlverbier is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Eiffage SA and Tlverbier SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tlverbier SA 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 Tlverbier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tlverbier SA has no effect on the direction of Eiffage SA i.e., Eiffage SA and Tlverbier go up and down completely randomly.

Pair Corralation between Eiffage SA and Tlverbier

Assuming the 90 days trading horizon Eiffage SA is expected to generate 0.45 times more return on investment than Tlverbier. However, Eiffage SA is 2.21 times less risky than Tlverbier. It trades about 0.24 of its potential returns per unit of risk. Tlverbier SA is currently generating about 0.01 per unit of risk. If you would invest  8,472  in Eiffage SA on December 31, 2024 and sell it today you would earn a total of  2,533  from holding Eiffage SA or generate 29.9% return on investment over 90 days.

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

Eiffage SA  vs.  Tlverbier SA

Eiffage SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eiffage SA are ranked lower than 19 (%) 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.

Tlverbier SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Eiffage SA and Tlverbier

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

The idea behind Eiffage SA and Tlverbier 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.