Correlation Between Easy Software and TESCO PLC

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

By analyzing existing cross correlation between Easy Software AG and TESCO PLC ADR1, you can compare the effects of market volatilities on Easy Software and TESCO PLC 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 Easy Software with a short position of TESCO PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and TESCO PLC.

Diversification Opportunities for Easy Software and TESCO PLC

0.38

Correlation Coefficient

Easy Software  TESCO PLC

Weak diversification

The 3 months correlation between Easy and TESCO is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and TESCO PLC ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TESCO PLC ADR1 and Easy Software 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 Easy Software AG are associated (or correlated) with TESCO PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TESCO PLC ADR1 has no effect on the direction of Easy Software i.e., Easy Software and TESCO PLC go up and down completely randomly.

Pair Corralation between Easy Software and TESCO PLC

Assuming the 90 days trading horizon Easy Software AG is expected to generate 0.65 times more return on investment than TESCO PLC. However, Easy Software AG is 1.53 times less risky than TESCO PLC. It trades about 0.01 of its potential returns per unit of risk. TESCO PLC ADR1 is currently generating about -0.09 per unit of risk. If you would invest  1,780  in Easy Software AG on April 17, 2025 and sell it today you would earn a total of  0.00  from holding Easy Software AG or generate 0.0% return on investment over 90 days.

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

Easy Software AG  vs.  TESCO PLC ADR1

Easy Software AG

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Easy Software may actually be approaching a critical reversion point that can send shares even higher in August 2025.

TESCO PLC ADR1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TESCO PLC ADR1 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TESCO PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Easy Software and TESCO PLC

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

The idea behind Easy Software AG and TESCO PLC ADR1 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.