Correlation Between Frigoglass SAIC and Euroconsultants

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

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

Diversification Opportunities for Frigoglass SAIC and Euroconsultants

-0.03

Correlation Coefficient

Frigoglass SAIC  Euroconsultants

Good diversification

The 3 months correlation between Frigoglass and Euroconsultants is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Frigoglass SAIC and Euroconsultants SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euroconsultants SA and Frigoglass SAIC 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 Frigoglass SAIC are associated (or correlated) with Euroconsultants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euroconsultants SA has no effect on the direction of Frigoglass SAIC i.e., Frigoglass SAIC and Euroconsultants go up and down completely randomly.

Pair Corralation between Frigoglass SAIC and Euroconsultants

Assuming the 90 days trading horizon Frigoglass SAIC is expected to generate 3.38 times more return on investment than Euroconsultants. However, Frigoglass SAIC is 3.38 times more volatile than Euroconsultants SA. It trades about 0.05 of its potential returns per unit of risk. Euroconsultants SA is currently generating about -0.1 per unit of risk. If you would invest  20.00  in Frigoglass SAIC on September 14, 2024 and sell it today you would earn a total of  2.00  from holding Frigoglass SAIC or generate 10.0% return on investment over 90 days.

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

Frigoglass SAIC  vs.  Euroconsultants SA

Frigoglass SAIC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Frigoglass SAIC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Frigoglass SAIC sustained solid returns over the last few months and may actually be approaching a breakup point.

Euroconsultants SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euroconsultants SA 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 Frigoglass SAIC and Euroconsultants

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

The idea behind Frigoglass SAIC and Euroconsultants 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.