Correlation Between Groupama Entreprises and Naranja Standard

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

By analyzing existing cross correlation between Groupama Entreprises N and Naranja Standard Poors, you can compare the effects of market volatilities on Groupama Entreprises and Naranja Standard 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 Groupama Entreprises with a short position of Naranja Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groupama Entreprises and Naranja Standard.

Diversification Opportunities for Groupama Entreprises and Naranja Standard

0.8

Correlation Coefficient

Groupama Entreprises  Naranja Standard

Very poor diversification

The 3 months correlation between Groupama and Naranja is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Groupama Entreprises N and Naranja Standard Poors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naranja Standard Poors and Groupama Entreprises 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 Groupama Entreprises N are associated (or correlated) with Naranja Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naranja Standard Poors has no effect on the direction of Groupama Entreprises i.e., Groupama Entreprises and Naranja Standard go up and down completely randomly.

Pair Corralation between Groupama Entreprises and Naranja Standard

Assuming the 90 days trading horizon Groupama Entreprises is expected to generate 6.35 times less return on investment than Naranja Standard. But when comparing it to its historical volatility, Groupama Entreprises N is 59.19 times less risky than Naranja Standard. It trades about 0.99 of its potential returns per unit of risk. Naranja Standard Poors is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,164  in Naranja Standard Poors on October 26, 2024 and sell it today you would earn a total of  4,744  from holding Naranja Standard Poors or generate 51.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.6%
Values	Daily Returns

Groupama Entreprises N  vs.  Naranja Standard Poors

Groupama Entreprises

Risk-Adjusted Performance

74 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Groupama Entreprises N are ranked lower than 74 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Groupama Entreprises is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Naranja Standard Poors

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Naranja Standard Poors are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Naranja Standard may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Groupama Entreprises and Naranja Standard

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

The idea behind Groupama Entreprises N and Naranja Standard Poors 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.