Correlation Between SPIE SA and Elis SA

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

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

Diversification Opportunities for SPIE SA and Elis SA

0.43

Correlation Coefficient

SPIE SA  Elis SA

Very weak diversification

The 3 months correlation between SPIE and Elis is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding SPIE SA and Elis SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elis SA and SPIE 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 SPIE SA 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 SPIE SA i.e., SPIE SA and Elis SA go up and down completely randomly.

Pair Corralation between SPIE SA and Elis SA

Assuming the 90 days trading horizon SPIE SA is expected to generate 0.76 times more return on investment than Elis SA. However, SPIE SA is 1.32 times less risky than Elis SA. It trades about 0.25 of its potential returns per unit of risk. Elis SA is currently generating about 0.03 per unit of risk. If you would invest  2,926  in SPIE SA on December 1, 2024 and sell it today you would earn a total of  502.00  from holding SPIE SA or generate 17.16% return on investment over 90 days.

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

SPIE SA  vs.  Elis SA

SPIE SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPIE SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SPIE SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Elis SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elis SA are ranked lower than 2 (%) 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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPIE SA and Elis SA

The main advantage of trading using opposite SPIE SA and Elis SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPIE SA 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 SPIE SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.