Correlation Between Robertet and EPC Groupe

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

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

Diversification Opportunities for Robertet and EPC Groupe

-0.64

Correlation Coefficient

Robertet  EPC Groupe

Excellent diversification

The 3 months correlation between Robertet and EPC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Robertet SA and EPC Groupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPC Groupe and Robertet 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 Robertet SA are associated (or correlated) with EPC Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPC Groupe has no effect on the direction of Robertet i.e., Robertet and EPC Groupe go up and down completely randomly.

Pair Corralation between Robertet and EPC Groupe

Assuming the 90 days trading horizon Robertet SA is expected to under-perform the EPC Groupe. But the stock apears to be less risky and, when comparing its historical volatility, Robertet SA is 1.95 times less risky than EPC Groupe. The stock trades about -0.16 of its potential returns per unit of risk. The EPC Groupe is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  19,800  in EPC Groupe on December 4, 2024 and sell it today you would earn a total of  600.00  from holding EPC Groupe or generate 3.03% return on investment over 90 days.

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

Robertet SA  vs.  EPC Groupe

Robertet SA

Risk-Adjusted Performance

Very Weak

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

EPC Groupe

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EPC Groupe are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EPC Groupe may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Robertet and EPC Groupe

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

The idea behind Robertet SA and EPC Groupe 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.