Correlation Between Eurazeo and Orapi SA

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

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

Diversification Opportunities for Eurazeo and Orapi SA

-0.58

Correlation Coefficient

Eurazeo  Orapi SA

Excellent diversification

The 3 months correlation between Eurazeo and Orapi is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Eurazeo and Orapi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orapi SA and Eurazeo 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 Eurazeo are associated (or correlated) with Orapi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orapi SA has no effect on the direction of Eurazeo i.e., Eurazeo and Orapi SA go up and down completely randomly.

Pair Corralation between Eurazeo and Orapi SA

Assuming the 90 days horizon Eurazeo is expected to generate 1.56 times less return on investment than Orapi SA. In addition to that, Eurazeo is 11.31 times more volatile than Orapi SA. It trades about 0.01 of its total potential returns per unit of risk. Orapi SA is currently generating about 0.19 per unit of volatility. If you would invest  642.00  in Orapi SA on October 5, 2024 and sell it today you would earn a total of  8.00  from holding Orapi SA or generate 1.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

Eurazeo  vs.  Orapi SA

Eurazeo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Orapi SA

Risk-Adjusted Performance

0 of 100

Good

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

Pair Trading with Eurazeo and Orapi SA

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

The idea behind Eurazeo and Orapi 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.