Correlation Between General Commercial and Ekter SA

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

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

Diversification Opportunities for General Commercial and Ekter SA

0.68

Correlation Coefficient

General Commercial  Ekter SA

Poor diversification

The 3 months correlation between General and Ekter is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Commercial Industrial and Ekter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekter SA and General Commercial 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 General Commercial Industrial are associated (or correlated) with Ekter SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekter SA has no effect on the direction of General Commercial i.e., General Commercial and Ekter SA go up and down completely randomly.

Pair Corralation between General Commercial and Ekter SA

Assuming the 90 days trading horizon General Commercial Industrial is expected to generate 0.72 times more return on investment than Ekter SA. However, General Commercial Industrial is 1.38 times less risky than Ekter SA. It trades about 0.0 of its potential returns per unit of risk. Ekter SA is currently generating about -0.08 per unit of risk. If you would invest  134.00  in General Commercial Industrial on September 14, 2024 and sell it today you would lose (1.00) from holding General Commercial Industrial or give up 0.75% of portfolio value over 90 days.

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

General Commercial Industrial  vs.  Ekter SA

General Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ekter SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ekter SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with General Commercial and Ekter SA

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

The idea behind General Commercial Industrial and Ekter 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.