Correlation Between Accord Financial and Edenred Malakoff

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Can any of the company-specific risk be diversified away by investing in both Accord Financial and Edenred Malakoff 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 Accord Financial and Edenred Malakoff into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accord Financial Corp and Edenred Malakoff ADR, you can compare the effects of market volatilities on Accord Financial and Edenred Malakoff 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 Accord Financial with a short position of Edenred Malakoff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accord Financial and Edenred Malakoff.

Diversification Opportunities for Accord Financial and Edenred Malakoff

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Accord and Edenred is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Accord Financial Corp and Edenred Malakoff ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edenred Malakoff ADR and Accord Financial 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 Accord Financial Corp are associated (or correlated) with Edenred Malakoff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edenred Malakoff ADR has no effect on the direction of Accord Financial i.e., Accord Financial and Edenred Malakoff go up and down completely randomly.

Pair Corralation between Accord Financial and Edenred Malakoff

Assuming the 90 days horizon Accord Financial Corp is expected to under-perform the Edenred Malakoff. But the pink sheet apears to be less risky and, when comparing its historical volatility, Accord Financial Corp is 1.39 times less risky than Edenred Malakoff. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Edenred Malakoff ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,518  in Edenred Malakoff ADR on December 30, 2023 and sell it today you would earn a total of  159.00  from holding Edenred Malakoff ADR or generate 6.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy86.03%
ValuesDaily Returns

Accord Financial Corp  vs.  Edenred Malakoff ADR

 Performance 
       Timeline  
Accord Financial Corp 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

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

Accord Financial and Edenred Malakoff Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Accord Financial and Edenred Malakoff

The main advantage of trading using opposite Accord Financial and Edenred Malakoff positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accord Financial position performs unexpectedly, Edenred Malakoff 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 Edenred Malakoff will offset losses from the drop in Edenred Malakoff's long position.
The idea behind Accord Financial Corp and Edenred Malakoff 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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