Correlation Between Elis SA and Cintas

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

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

Diversification Opportunities for Elis SA and Cintas

0.21

Correlation Coefficient

Elis SA  Cintas

Modest diversification

The 3 months correlation between Elis and Cintas is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Elis SA and Cintas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cintas and Elis 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 Elis SA are associated (or correlated) with Cintas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cintas has no effect on the direction of Elis SA i.e., Elis SA and Cintas go up and down completely randomly.

Pair Corralation between Elis SA and Cintas

Assuming the 90 days horizon Elis SA is expected to generate 0.79 times more return on investment than Cintas. However, Elis SA is 1.27 times less risky than Cintas. It trades about 0.17 of its potential returns per unit of risk. Cintas is currently generating about 0.03 per unit of risk. If you would invest  2,100  in Elis SA on April 21, 2025 and sell it today you would earn a total of  328.00  from holding Elis SA or generate 15.62% return on investment over 90 days.

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

Elis SA  vs.  Cintas

Elis SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elis SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Elis SA reported solid returns over the last few months and may actually be approaching a breakup point.

Cintas

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cintas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Elis SA and Cintas

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

The idea behind Elis SA and Cintas 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.