Correlation Between Ekinops SA and Lyxor PEA

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

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

Diversification Opportunities for Ekinops SA and Lyxor PEA

-0.42

Correlation Coefficient

Ekinops SA  Lyxor PEA

Very good diversification

The 3 months correlation between Ekinops and Lyxor is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ekinops SA and Lyxor PEA SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor PEA SP and Ekinops 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 Ekinops SA are associated (or correlated) with Lyxor PEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor PEA SP has no effect on the direction of Ekinops SA i.e., Ekinops SA and Lyxor PEA go up and down completely randomly.

Pair Corralation between Ekinops SA and Lyxor PEA

Assuming the 90 days trading horizon Ekinops SA is expected to under-perform the Lyxor PEA. In addition to that, Ekinops SA is 4.16 times more volatile than Lyxor PEA SP. It trades about -0.06 of its total potential returns per unit of risk. Lyxor PEA SP is currently generating about 0.16 per unit of volatility. If you would invest  3,427  in Lyxor PEA SP on September 12, 2024 and sell it today you would earn a total of  1,570  from holding Lyxor PEA SP or generate 45.81% return on investment over 90 days.

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

Ekinops SA  vs.  Lyxor PEA SP

Ekinops SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lyxor PEA SP

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor PEA SP are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lyxor PEA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ekinops SA and Lyxor PEA

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

The idea behind Ekinops SA and Lyxor PEA SP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.