Correlation Between Imerys SA and Ekinops SA

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

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

Diversification Opportunities for Imerys SA and Ekinops SA

0.66

Correlation Coefficient

Imerys SA  Ekinops SA

Poor diversification

The 3 months correlation between Imerys and Ekinops is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Imerys SA and Ekinops SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ekinops SA and Imerys 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 Imerys SA are associated (or correlated) with Ekinops SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ekinops SA has no effect on the direction of Imerys SA i.e., Imerys SA and Ekinops SA go up and down completely randomly.

Pair Corralation between Imerys SA and Ekinops SA

Assuming the 90 days horizon Imerys SA is expected to generate 1.07 times more return on investment than Ekinops SA. However, Imerys SA is 1.07 times more volatile than Ekinops SA. It trades about 0.08 of its potential returns per unit of risk. Ekinops SA is currently generating about 0.04 per unit of risk. If you would invest  2,772  in Imerys SA on December 30, 2024 and sell it today you would earn a total of  358.00  from holding Imerys SA or generate 12.91% return on investment over 90 days.

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

Imerys SA  vs.  Ekinops SA

Imerys SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Imerys SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Imerys SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Ekinops SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ekinops SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Ekinops SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Imerys SA and Ekinops SA

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

The idea behind Imerys SA and Ekinops 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.