Correlation Between Ecoslops and Methanor

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

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

Diversification Opportunities for Ecoslops and Methanor

0.73

Correlation Coefficient

Ecoslops  Methanor

Poor diversification

The 3 months correlation between Ecoslops and Methanor is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Ecoslops SA and Methanor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methanor and Ecoslops 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 Ecoslops SA are associated (or correlated) with Methanor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methanor has no effect on the direction of Ecoslops i.e., Ecoslops and Methanor go up and down completely randomly.

Pair Corralation between Ecoslops and Methanor

Assuming the 90 days trading horizon Ecoslops SA is expected to generate 1.42 times more return on investment than Methanor. However, Ecoslops is 1.42 times more volatile than Methanor. It trades about 0.22 of its potential returns per unit of risk. Methanor is currently generating about 0.07 per unit of risk. If you would invest  47.00  in Ecoslops SA on April 25, 2025 and sell it today you would earn a total of  52.00  from holding Ecoslops SA or generate 110.64% return on investment over 90 days.

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

Ecoslops SA  vs.  Methanor

Ecoslops SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ecoslops SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ecoslops reported solid returns over the last few months and may actually be approaching a breakup point.

Methanor

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Methanor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Methanor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecoslops and Methanor

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

The idea behind Ecoslops SA and Methanor 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 Transaction History module to view history of all your transactions and understand their impact on performance.