Correlation Between Smcp SAS and Elis SA

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

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

Diversification Opportunities for Smcp SAS and Elis SA

-0.54

Correlation Coefficient

Smcp SAS  Elis SA

Excellent diversification

The 3 months correlation between Smcp and Elis is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Smcp SAS and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA and Smcp SAS 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 Smcp SAS are associated (or correlated) with Elis SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elis SA has no effect on the direction of Smcp SAS i.e., Smcp SAS and Elis SA go up and down completely randomly.

Pair Corralation between Smcp SAS and Elis SA

Assuming the 90 days trading horizon Smcp SAS is expected to generate 2.73 times more return on investment than Elis SA. However, Smcp SAS is 2.73 times more volatile than Elis SA. It trades about 0.37 of its potential returns per unit of risk. Elis SA is currently generating about -0.11 per unit of risk. If you would invest  291.00  in Smcp SAS on September 29, 2024 and sell it today you would earn a total of  68.00  from holding Smcp SAS or generate 23.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Smcp SAS  vs.  Elis SA

Smcp SAS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smcp SAS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Smcp SAS sustained solid returns over the last few months and may actually be approaching a breakup point.

Elis SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elis SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Elis SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smcp SAS and Elis SA

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

The idea behind Smcp SAS and Elis 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.