Correlation Between Stef SA and Esker SA

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

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

Diversification Opportunities for Stef SA and Esker SA

-0.4

Correlation Coefficient

Stef SA  Esker SA

Very good diversification

The 3 months correlation between Stef and Esker is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Esker SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esker SA and Stef 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 Stef SA are associated (or correlated) with Esker SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esker SA has no effect on the direction of Stef SA i.e., Stef SA and Esker SA go up and down completely randomly.

Pair Corralation between Stef SA and Esker SA

Assuming the 90 days trading horizon Stef SA is expected to under-perform the Esker SA. But the stock apears to be less risky and, when comparing its historical volatility, Stef SA is 1.28 times less risky than Esker SA. The stock trades about -0.04 of its potential returns per unit of risk. The Esker SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  24,000  in Esker SA on September 12, 2024 and sell it today you would earn a total of  2,000  from holding Esker SA or generate 8.33% return on investment over 90 days.

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

Stef SA  vs.  Esker SA

Stef SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Esker SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Esker SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Esker SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stef SA and Esker SA

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

The idea behind Stef SA and Esker 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.