Correlation Between Electricite and EVN AG

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

By analyzing existing cross correlation between Electricite De France and EVN AG ADR, you can compare the effects of market volatilities on Electricite and EVN AG 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 Electricite with a short position of EVN AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electricite and EVN AG.

Diversification Opportunities for Electricite and EVN AG

-0.66

Correlation Coefficient

Electricite  EVN AG

Excellent diversification

The 3 months correlation between Electricite and EVN is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Electricite De France and EVN AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN AG ADR and Electricite 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 Electricite De France are associated (or correlated) with EVN AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN AG ADR has no effect on the direction of Electricite i.e., Electricite and EVN AG go up and down completely randomly.

Pair Corralation between Electricite and EVN AG

If you would invest  349.00  in EVN AG ADR on February 4, 2024 and sell it today you would earn a total of  0.00  from holding EVN AG ADR or generate 0.0% return on investment over 90 days.

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

Electricite De France  vs.  EVN AG ADR

Electricite De France

Risk-Adjusted Performance

0 of 100

Very Weak

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

EVN AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, EVN AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Electricite and EVN AG

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

The idea behind Electricite De France and EVN AG ADR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.