Correlation Between Yellow Pages and EON SE

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

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

Diversification Opportunities for Yellow Pages and EON SE

-0.69

Correlation Coefficient

Yellow Pages  EON SE

Excellent diversification

The 3 months correlation between Yellow and EON is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Yellow Pages Limited and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE and Yellow Pages 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 Yellow Pages Limited are associated (or correlated) with EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of Yellow Pages i.e., Yellow Pages and EON SE go up and down completely randomly.

Pair Corralation between Yellow Pages and EON SE

Assuming the 90 days horizon Yellow Pages Limited is expected to under-perform the EON SE. In addition to that, Yellow Pages is 1.71 times more volatile than EON SE. It trades about -0.02 of its total potential returns per unit of risk. EON SE is currently generating about 0.26 per unit of volatility. If you would invest  1,125  in EON SE on December 30, 2024 and sell it today you would earn a total of  261.00  from holding EON SE or generate 23.2% return on investment over 90 days.

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

Yellow Pages Limited  vs.  EON SE

Yellow Pages Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yellow Pages Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yellow Pages is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

EON SE

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EON SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, EON SE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yellow Pages and EON SE

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

The idea behind Yellow Pages Limited and EON SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.