Correlation Between Dassault Systemes and Elmo Software

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

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

Diversification Opportunities for Dassault Systemes and Elmo Software

-0.89

Correlation Coefficient

Dassault Systemes  Elmo Software

Pay attention - limited upside

The 3 months correlation between Dassault and Elmo is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SA and Elmo Software Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmo Software Limited and Dassault Systemes 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 Dassault Systemes SA are associated (or correlated) with Elmo Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmo Software Limited has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Elmo Software go up and down completely randomly.

Pair Corralation between Dassault Systemes and Elmo Software

If you would invest  4,107  in Dassault Systemes SA on February 22, 2024 and sell it today you would earn a total of  16.00  from holding Dassault Systemes SA or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

Dassault Systemes SA  vs.  Elmo Software Limited

Dassault Systemes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dassault Systemes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Elmo Software Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dassault Systemes and Elmo Software

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

The idea behind Dassault Systemes SA and Elmo Software Limited 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 Global Correlations module to find global opportunities by holding instruments from different markets.