Correlation Between Veolia Environnement and Hansa Investment

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

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

Diversification Opportunities for Veolia Environnement and Hansa Investment

0.07

Correlation Coefficient

Veolia Environnement  Hansa Investment

Significant diversification

The 3 months correlation between Veolia and Hansa is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment and Veolia Environnement 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 Veolia Environnement VE are associated (or correlated) with Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Hansa Investment go up and down completely randomly.

Pair Corralation between Veolia Environnement and Hansa Investment

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Hansa Investment. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 1.31 times less risky than Hansa Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Hansa Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  22,099  in Hansa Investment on September 12, 2024 and sell it today you would earn a total of  1,701  from holding Hansa Investment or generate 7.7% return on investment over 90 days.

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

Veolia Environnement VE  vs.  Hansa Investment

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement VE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Veolia Environnement is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hansa Investment

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hansa Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hansa Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Veolia Environnement and Hansa Investment

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

The idea behind Veolia Environnement VE and Hansa Investment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.