Correlation Between GEK TERNA and Ekter SA

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

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

Diversification Opportunities for GEK TERNA and Ekter SA

0.42

Correlation Coefficient

GEK TERNA  Ekter SA

Very weak diversification

The 3 months correlation between GEK and Ekter is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GEK TERNA Holdings and Ekter SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekter SA and GEK TERNA 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 GEK TERNA Holdings 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 GEK TERNA i.e., GEK TERNA and Ekter SA go up and down completely randomly.

Pair Corralation between GEK TERNA and Ekter SA

Assuming the 90 days trading horizon GEK TERNA Holdings is expected to under-perform the Ekter SA. But the stock apears to be less risky and, when comparing its historical volatility, GEK TERNA Holdings is 4.44 times less risky than Ekter SA. The stock trades about -0.05 of its potential returns per unit of risk. The Ekter SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Ekter SA on December 2, 2024 and sell it today you would earn a total of  52.00  from holding Ekter SA or generate 33.99% return on investment over 90 days.

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

GEK TERNA Holdings  vs.  Ekter SA

GEK TERNA Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days GEK TERNA Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, GEK TERNA is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Ekter SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ekter SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ekter SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GEK TERNA and Ekter SA

The main advantage of trading using opposite GEK TERNA and Ekter SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEK TERNA 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 GEK TERNA Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..