Correlation Between EssilorLuxottica and Fresh Harvest

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

By analyzing existing cross correlation between EssilorLuxottica Socit anonyme and Fresh Harvest Products, you can compare the effects of market volatilities on EssilorLuxottica and Fresh Harvest 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 EssilorLuxottica with a short position of Fresh Harvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of EssilorLuxottica and Fresh Harvest.

Diversification Opportunities for EssilorLuxottica and Fresh Harvest

-0.12

Correlation Coefficient

EssilorLuxottica  Fresh Harvest

Good diversification

The 3 months correlation between EssilorLuxottica and Fresh is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding EssilorLuxottica Socit anonyme and Fresh Harvest Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Harvest Products and EssilorLuxottica 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 EssilorLuxottica Socit anonyme are associated (or correlated) with Fresh Harvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Harvest Products has no effect on the direction of EssilorLuxottica i.e., EssilorLuxottica and Fresh Harvest go up and down completely randomly.

Pair Corralation between EssilorLuxottica and Fresh Harvest

Assuming the 90 days horizon EssilorLuxottica Socit anonyme is expected to under-perform the Fresh Harvest. But the pink sheet apears to be less risky and, when comparing its historical volatility, EssilorLuxottica Socit anonyme is 10.47 times less risky than Fresh Harvest. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Fresh Harvest Products is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Fresh Harvest Products on February 7, 2024 and sell it today you would earn a total of  35.00  from holding Fresh Harvest Products or generate 70.0% return on investment over 90 days.

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

EssilorLuxottica Socit anonyme  vs.  Fresh Harvest Products

EssilorLuxottica Socit

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EssilorLuxottica Socit anonyme are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, EssilorLuxottica may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Fresh Harvest Products

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Harvest Products are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Fresh Harvest demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EssilorLuxottica and Fresh Harvest

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

The idea behind EssilorLuxottica Socit anonyme and Fresh Harvest Products 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .