Correlation Between ESSILORLUXOTTICA and HOYA

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

By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and HOYA Corporation, you can compare the effects of market volatilities on ESSILORLUXOTTICA and HOYA 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 HOYA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and HOYA.

Diversification Opportunities for ESSILORLUXOTTICA and HOYA

0.58

Correlation Coefficient

ESSILORLUXOTTICA  HOYA

Very weak diversification

The 3 months correlation between ESSILORLUXOTTICA and HOYA is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and HOYA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA 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 12ON are associated (or correlated) with HOYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA has no effect on the direction of ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and HOYA go up and down completely randomly.

Pair Corralation between ESSILORLUXOTTICA and HOYA

Assuming the 90 days trading horizon ESSILORLUXOTTICA 12ON is expected to under-perform the HOYA. In addition to that, ESSILORLUXOTTICA is 1.26 times more volatile than HOYA Corporation. It trades about -0.02 of its total potential returns per unit of risk. HOYA Corporation is currently generating about 0.04 per unit of volatility. If you would invest  10,050  in HOYA Corporation on April 23, 2025 and sell it today you would earn a total of  400.00  from holding HOYA Corporation or generate 3.98% return on investment over 90 days.

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

ESSILORLUXOTTICA 12ON  vs.  HOYA Corp.

ESSILORLUXOTTICA 12ON

Risk-Adjusted Performance

Very Weak

Over the last 90 days ESSILORLUXOTTICA 12ON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, ESSILORLUXOTTICA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HOYA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Corporation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HOYA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ESSILORLUXOTTICA and HOYA

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

The idea behind ESSILORLUXOTTICA 12ON and HOYA Corporation 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.